“There is zero risk for French banks”, maintains an economist

In the aftermath of Credit Suisse’s plunge on the stock market, heckled by the bankruptcy of Silicon Valley Bank, the number 2 in the Swiss banking sector announced on the night of Wednesday March 15, 2023 that it would borrow up to 50 billion Swiss francs from of the Swiss central bank. This announcement shows that there is no need to worry for French banks, “there is zero risk” supports this Thursday on franceinfo Philippe Dessertine, director of the Institute of Haute Finance.

According to this economist, this loan proves on the contrary that “if there was the slightest risk, the state will come because we cannot afford to see the banks leave”. On the other hand, “the real question that arises is rather for the taxpayer”, says Philippe Dessertine. He recalls that since the Greek public debt crisis in 2011, “we had an explosion of debt”not to mention the health crisis linked to the coronavirus, which “makes states fragile”. Thus, if “States must continue to come to the rescue of banks”they may end up turning to taxpayers, by increasing taxes, fears the economist.

>>Banks: Credit Suisse in turmoil

Philippe Dessertine wants to be reassuring, however: he affirms that Crédit Suisse “can’t go bankrupt”since “the Swiss central bank will come to its rescue if it lacks liquidity”. This expert recalls that the action of the second Swiss bank fell by 24% on Thursday on the stock market, it is mainly because of the comments made by its main shareholder, the Saudi National Bank, which has indeed ruled out any new injection of money when needed. These words”were enough to trigger panic, because we wondered if what had happened in the United States with Silicon Valley Bank was not also going to happen for Credit Suisse, which we have known to be fragile for years ” .

The setbacks of Credit Suisse occur in addition while the European Central Bank must indicate during the day by how much it is increasing its key rates. However, the concern on the Swiss side “completely changes the situation”, warns Philippe Dessertine. “The problem of liquidity, which has become central to the financial system, presupposes potential massive injections from central banks”, explains the director of the Institut de Haute Finance. However, the question arises of choosing between “the plague and cholera”: because if increasing rates makes it possible to fight against inflation, “this enormously weakens bank balance sheets”.