The Bank of England on Thursday followed the Federal Reserve and the Swiss National Bank in ploughing on with interest rates hikes, saying the UK banking sector was strong enough to withstand the instability that rippled through markets this month.
Earlier on Thursday, the Swiss National Bank raised its benchmark interest rate by 50 basis points and said Credit Suisse's takeover by its Swiss rival UBSSwiss authorities had urged the banks to come together and offered financial guarantees worth up to 260 billion Swiss francs to get the deal done.
"The European banking sector's fundamentals look healthy. But the ongoing confidence crisis could limit banks' risk appetite and reduce the flow of credit," Citigroup equity strategists said.The rescue of Credit Suisse ignited broader concerns about investors' exposure to a fragile banking sector. The decision to prioritise shareholders over Additional Tier 1 bondholders rattled the $275 billion AT1 bond market and some Credit Suisse AT1 bondholders were seeking legal advice.
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