i'm craig melvin. thank you for watching. welcome to the third and final hour of "squawk box" in europe we are looking at the market reaction welcome to the u.s. viewers joining us at this hour. what we have with markets, we wrapped up contagion risk in the banking sector moving on the european space yesterday. we are concentrating on credit suisse after the rescue and lifeline extended from the swiss national bank.

that move having an impact on the early news we see on stock prices the stoxx 600 is bouncing. up .70%. in contrast to yesterday, where we fell into the close, we were down 3% on the benchmark clawing back that territory. not all of it as we talk about a bounce back and green materializing on the charts. it is not all losses yesterday that we are expected to scoop up in this phase. let's look at the green and see the sectors at the start and if they are mirroring the u.s. action banks at the top we are seeing that sector showing some resilience this morning. healthcare at the bottom one area with a red patch this morning. defensive area elsewhere, moving higher in utilities and food and drink up .20%. a lot of areas had been taken into the red yesterday although

the concentration of risk was banks. telco in the green basic resources has been an area hard hit with oil and gas around the fears of the economic fallout of the banking contagion globally the sector is stronger this morning. household goods are rallying you see on the charts behind me where every stock in the basket is moving green. travel and leisure is moving higher if you look at the spot prices this week down 11% and taking with it stocks globally. retail stocks bouncing at 8% retailers reported numbers from zara and h& m. risk on for the market banks are out in front a bounce in a lot of names that have been hard hit to the top of the basket ing. soc gen.

the overall basket up 2.9% let's see what is on the european index a lot of territory to regain in terms of the ftse 100, we bounced 100 points 1.3% higher. look at the range. we are still below 7,500 points. that is a significant reversal in a short period of time. the french market is holding at 7,000 thanks to the gains this morning. escalating past the percentage rally on the uk stock market 1.7% higher. yesterday, it was down about 3.5% picking up less than half this morning. 1.7 on the dax you see the risk around the banks across in spain. ibex is stronger today and italian stocks 1.8% higher

that market up .18%. taking cues from the american market you see we are higher. futures have been in the green all morning. the ranges are slim. it stretches to 95 points on the dow jones industrial average confidence is building as we count to the open. credit suisse. we are waiting for signals to open up. the early range would suggest a bounce of 40% in the bank. that is marching higher the closer to the session this morning. credit suisse secured a $50 billion swiss franc lifeline from the swiss central bank after slumming to a record low the saudi national bank said it would not provide further a assi assistance finma said the lender met capital and liquidity

requirements credit suisse is the first global bank given an emergency lifeline since the 2008 financial crisis a couple more lines this morning. a note talking about this new loan facility from the central bank saying it improves the liquidity coverage this is liquid flows over 197% from 150%. the caveat is assuming the outflows are the same as the final quarter of last year a big question mark and that is what investors are looking at and the events over last number of days for the bank and if it is still stable at this point. we see credit suisse to buy debt on the market and concentration of risk with the re-pricing of the debt side and how much credit situuisse was having to . there was a tender offer of euro denominated note due in 2023 and

2024 the rest of the european banks from what we heard from regulators are bouncing. 4.5% on deutsche bank. it was the german bank hard hit. and commerz bank is stronger soc gen is up 4% and the spanish market with santander up 4%. they are seeing slow moves on the big named stocks that were disrupted in the session yesterday. ubs. we are waiting for those boards to show us some signals this morning. hsbc here in the uk was caught up in the rout yesterday despite the bank that scooped up svb uk. it shed 4% we have the signals now from credit suisse. it is bouncing up 30.8%.

it is marching higher. not the 40% from the early signals, but stronger is what we are seeing ubs is the other one i wanted to show you we saw the signals come quickly with that stock. 30.8% higher we are still down for the year at 68% violent moves in a short period of time. we are seeing the stock moving north. let's get to geoff joining us from zurich. geoff, this market is moving quickly with the action from regulators and central banks and help from the bank itself. >> reporter: absolutely, karen interesting to see where that early quote is settling. obviously, the snb has put a line under the concerns and rumors, but will this just be a short-term fix what does it ultimately mean for the viability of the the

restructuring plan put in place by the management at credit suisse let's also talk about the interest that there is in bank stocks more broadly now with mattias hein thank you for joining us let's talk about credit suisse here first come out of the gate strong this morning after the reassurance and guarantees we had from the snb. i think to help us understand what comes next for credit suisse is worth dwelling on why the market was so nervous about this business and why we saw what we saw over the last 48 hours. what do you think is going on? >> i think it was a combination of negative news coming out from the s.e.c. putting a question mark on risk management

procedures and the asset side of the balance sheet yesterday. declines that new injection and that worried sources going forward. we had the regional banking crisis spilling over into the european market. that is a liquidity issue that took hold of credit suisse as we saw yesterday, it was a big spike in risk premium. i imagine there was tremendous pressure on the deposit side with credit suisse and people starting to see their exposure that can put a decent liquidity profile like credit suisse into trouble. >> as you look at this organization, what do you think

it needs to do to stave off any further concerns through the cycle? >> it is difficult if there is an issue with the banking crisis once you struggle with profitability, you are vulnerable at this time. i think the assurance of depositors is an important step. the snb has done the right thing to provide liquidity it is not about the capital call with tier i which looks fine with this additional liquidity, i think it's the right thing to assure depositors that it is a sound bank to do business. >> from the investment perspective, how do you feel about owning credit situation? let me ask do you own credit

su suisse >> we are invested in european banks. not credit suisse particularly in our investment strategies when we look at the european banks, their issues are less pronounced we are coming out of the ten-year structure cycle those balance sheets look rather clean. they have been benefitting from the interest rate cycle. we have seen positive trajectory >> that is ironic, isn't it? i agree with you as we run through the quarterly earning cycle and we have seen increment at improvements on profitability as a result of rising interest rates. we are now starting to see the consequences of those rising interest rates on expectations for underlining business activity are we getting close to the point, do you think, or have we past that point where it is time

to rash etchet down exposure an look for other parts of the market >> it is curious with the impact on the macro side with the fallout with the u.s. banking sector in europe i think the initial impact shouldn't be too harsh from rising interest rates. i think it is to early to cut exposure to those areas their funding side looks well at this point >> what about the risk of contagion if we see further bank collapses in the united states i think there were a few market commentators that were surprised to see the declines that we experienced in european bank stocks given the initial problem largely seemed to be around silicon valley bank and focused on that bank's unique connection

to private equity and private markets. >> i agree silicon valley banks was a specific event with largely uninsured depositors on the banking side if you look at the larger banks, much better liquidity profile. different funding sources. i think that's below risk which is warranted you have some contagion in the short-term >> let's just broaden our focus for a while here we are looking at a world that potentially is taking us toward recession in the united states and in europe. the jury is still out at this point, but central banks are worried about fighting inflation and the cost of capital. in the world over the next 12 to 18 months, how exposed do i want

to be to equity markets at this point against holding cash or bonds? >> we still have a constructive sense to equities. i think it is mainly from the growth trajectory which has been improving the last month and cpi is a backward looking data point, if you will if i look forward now and inn corporate the news flow from the banking fallout from the u.s. and europe, that will hit inflation and policymakers will take a step back and keep capital costs at the current level. that would be supportive on the valuation side the other thing is if macroeconomics worries spill over we're not there yet. >> that is interesting you feel we are close to the peak on the rate hiking cycle? >> i think so, yes i think the recent development clearly has dented the appetite

for going on auto pilot and hiking rates further in europe, the jury is still out. that will be a big decision today. overall, in the u.s., it looks strongly that we have ended or paused the rate hike cycle for a few months >> i think the language is going to be fascinating out of frankfurt today to see how carefully christine lagarde needs to move the financial sector and need to fight inflation. mattias, thank you for joining us >> re let me send it back to you in the studio in london >> thank you, geoff. credit suisse. it is not volatile 32% high irreer at the moment >> the string the banks coming out. spanish banks saying the exposure to credit suisse is

below 1 billion euro according to a source. that is fascinating. that lifeline from the swiss. >> it is reminiscent of banks shoring up positions back over a decade ago wednesday's banking meltdown came after the credit suisse not getting a lifeline from saudi nationals. we have hadley with more >> reporter: trying to calibrate his remarks from 24 hours ago here in riyadh where he was responding to comments at the forum where he said we have not got the topic of assistance from the government under discussion at this point. we have liquidity situation

under control and well capit capitalized. no sign of what we would see which is 24 hours of panic which is what we saw he was clear to me to say at the end of the day we are only able to go to a 9.9 stakes in the lender unless they do another capital raise. that is not going to change. listen to what he had to say. >> the markets are very skittish they are looking for stories or things that, you know, validate concern. inreality, back in orctober, we had suggestions and articulated we would not go beyond 9.9 even if we desire to, there are too many complications to do that globally. yesterday's message was the same i'd like to cover three points number one, the message has not

changed. the same message as we talked about in october >> this is not a vote of no conf confidence >> the second message is no message of providing assistance. there has been no discussion in the past since october about credit suisse needing more capital or requiring assistance. >> we have seen them go to saudi national bank for a lifeline >> that was unfortunate chatter in the system which we refused assistance we were never asked. to my knowledge, there has not been any assistance. that is point number two the third important point is the bank is on its way to do the restructuring they have been talking about. they have two or three great crown jewels in the business in the middle east and asia and

domestic banking all of these are stable and long-term businesses they are working on shedding the volatile businesses and we remain optimistic on them executing the plan the bank is 150-year old brand we are optimistic it will go back to being what it is. >> you believe what we have soon the last 24 hours is the from a the -- fragility of the market? >> of the banking sector dropped. i think a lot of people were looking for excuses. it is panic. a little bit of panic. unwarranted for credit suisse or the entire market. we did have a failure last week. that is nothing to do what what we saw in 2008 this is an isolated incident regulators cut off the contagion

and any possibility of spillover. all of the regulators shown for the banks, they have done enough fence building and prudence and additional spare capital that those are protected and the smaller banks, the regulators have the resolve to cut off any potential contagion. >> back at the end of last year when you took the 9.9% stake in capital raise, we had the conversation of how much money you would be willing to buy in to credit suisse if they did another capital raise in the future, would you do that? >> the red line is 9.9 we will not go above that. to our fknowledge, they are not looking for capital. i don't think they would they are well capitalized. if you look at the swiss central bank yesterday, it looked at the ratios and everything's fine

i don't think they need more capital. >> reporter: saudi national bank chairman speaking to me and looking to recalibrate remarks from yesterday which setoff the firestorm in the markets this is coming off the back of the interview yesterday with the chairman of credit suisse where he pushed back on the idea of thinking about government safety answer he told me -- government assistance he told me we are well on our way to achieving the milestones and recalculation of the bank going forward. the chairman of snb said they were satisfied with credit suisse and the strategic plan to get the bank back on its feet. speaking to the fact that all of the comments coming right here out of saudi arabia and what it means going forward in terms of saudi arabia's place as a major player on the global markets guys >> thank you, hadley.

coming up on the show, european equities rally after the swiss central bank steps in to help credit suisse. stay with us we will be back after a short break.

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we are not seeing a vast amount of move in credit situswiss. now the latest of the four pro prints is 22.5 there is activity going on the volume of $37 million plus it is hard to gauge the real price. jpmorgan chase believes this will buy credit suisse time to execute restructuring plan it maintains an overweight on the credit suisse bonds as well. jpmorgan chase saying this could well give credit suisse the time to execute restructuring european banks, conkaren is loog at them.

given how they fell this week, it is a rally. it is a solid rally. i would not say extraordinary. >> the gains are just not sticking we had a very swift move to the downside yesterday enormous disruption across the board. many of the big names is a firmer day play out. 2.7% up for deutsche bank. some banks, in particular, have been hard hit. commerz bank is one investors are looking at closely as you move across from various different countries, take a look at the french names from soc gen at 2%. bnp. santander is p3% higher. we had a lot of investors wondering what the exposures are to credit suisse some of the names coming out

today explaining the extent of any contagion or spillover to their banks. credit suisse is 22.5% 4.8% on ubs. hsbc is 3% higher and barclays is 3.4%. in terms of the u.s. banks and frankfurt listing today, don't forget the fears rearing their head yesterday some in the u.s. names faded and investors circled back to the earlier fears from the week. of the big banks, jpmorgan chase is the only one soggy at this hour stronger range on wells fargo in particular 1.6% higher on the frankfurt trade. goldman's is near 1% jpmorgan chase in the red to a .25% on bank of america. the hsbc uk is reassuring

clients deposits are safe and loans supported. the memo to staff is operations continue as normal as the takeover process continues in a first on cnbc interview, hsbc uk ceo walked us through what happened. >> woke up saturday morning and saw the announcement and after 10:30, we were in touch with the regulator offering help. myself and global ceo both in contact. it went a little quiet i think at that point, we were just trying to offer any assistance we could. rothschild's within a point on saturday got a hold of us and we had access on sunday at 6:00 p.m. on sunday and lots of meetings throughout the day as far as we were concerned, it was a competitive situation.

i can honestly tell you up to 10:00 p.m. or 11:00 p.m. at night, it was still a competitive situation. around that time, we were in close dialogue with the regulator which was excellent on the details. it wasn't until early monday morning that we thought we got a bank and we started to prepare at this point. we are delighted we are hum bled and delighted we feel pleased. >> and fascinating interview credit suisse with a lot of activity up 23% coming up, wednesday's market rout adding to doubts on the ecb hiking path as investors look to see if christine lagarde will stick to her 50-basis point pledge today we get to annette in frankfurt

good morning welcome back we are here in zurich where there is a little bit of relief around the market open as we get an initial sharp spike in credit

suisse share price this after the snb effectively stepped in to provide a 50 billion franc lifeline to the embattled bank. the chairman of the saudi national bank tells cnbc there are no talks of providing additional financial assistance to credit suisse he tries to firm up the embattled lender. >> people were looking for excuses. it is panic. a little bit of panic. i believe completely unwarranted. whether for credit suisse or the market european banking stocks rebound after the bruising session wednesday. hsbc uk ceo tells this program this is a different kind of financial crisis >> having gone through 2008, i think we are in a very different position because banks have more liquidity and capital than it did at that time it is very different i don't think it compares to

2008 versus 2023 cracks opening in the global banking system casting doubt over the resolve of the ecb with the market now betting -- confused on the likelihood of the 50 basis point hike today. european stock markets have been open for half an hour so far of t far. we have claimed some green confidence returning as the lifeline has been extended to credit suisse. we are not recovering all territory. this is a benchmark that tumbled 2.9% yesterday you see it is still recovering at this stage. investors still nervous about the events that played out in recent sessions from the svb

story to what we have seen with credit suisse. a lot of banks declaring exposure still around the story. in terms of what we are seeing elsewhere, it is ecb day we are waiting for news around the deposit rate of 50 basis points which was on the table at the start of the week. investors were reassessing the pathway for the fed and many thought ecb would stay on target with the 50 basis points swiftly events moved around the european banks leaving question marks over that being achieved today and ramifications across the board. let's take you to the sector level. every sector in the green at the start. health care is under water by .30%. real estate is trading down this morning. the interest rates is the story there. banks up 2%. the banking index for europe fell 7% yesterday. there is an element here not

replacing all of the losses from yesterday. financial services containing the major banks in europe is tracking higher by 2.2%. the stocks with the top movers on credit suisse gaining 22% thanks to the lifeline from the swiss national bank. we have julius bear up this morning. and the likes of risk off taking names out of the trade this week in terms of weaker names, roche down 2.6%. m&g down 2%. credit suisse secured a lifeline from the country's central bank this comes a day after shares plunged to new lows after the top investor, saudi national bank, said it would not provide

more assistance. and it was reassured that the lender met capital requirements. the banking sector is rebounding after the worst session since february of 2022 in terms of the gains, we are still higher some of the better ones like commerz bank up 4% and ubs up 4.6% >> this has fueled speculation for the ecb today. ecb president christine lagarde was unaunambiguous in the comme last month it has rebounded back up to 50% from 25% spin a coin, everybody the yields on the european bond markets are 2.8% in spain, 3.3% as karen pointed

out. 1.6% for the italian paper annette, a very interesting question how big a crisis do we have in the european banks despite what the ecb has done maybe they have jitters behind you? >> reporter: i think there is, of course, a big discussion in the governing council here at the euro ecb clearly, if you look at what already happened when it comes to the rhetoric, is the periphery, italy and potentially also spain, is not in favor of hiking rates as fast as the core of the euro area which does want to hike rates. we have the fact with the austrian central banker who wants to move rates faster than the itae tatalian central bank.

the concern is the tightening could trigger a very fierce recession in their countries and real estate crisis we should talk about real estate the financing or the maturity of the mortgages outstanding is very different from every jurisdiction having said that, the likelihood that the ecb is not sticking to the 50 basis point hike. it is not extremely high because i think they don't want to install more panic into the market than there is already if you look at credit default swaps with eurozone banks like deutsche bank and commerz bank, they are risen, but not tremendously on back of the credit suisse story. they are nowhere where they were

back in november last year the panic in the banking market in the euro area is pretty much contained. >> annette, what happens with the balance sheet shrinking? there are liquidity issues out there. do you think the ecb will talk about the asset purchase program today? >> reporter: yes, they will. we had the member of the governing council and member of the executive board recently elaborating to length in the presentation and speech that the balance sheet is too big they have to shrink it there are various reasons for it clearly, of course, the ecb is buying up almost all of the sovereign debt market which is not good for the repo market the ecb does not want to actually disturb the market as much anymore of course, they also want to do

that because the monetary policy stance doesn't warrant that balance sheet. they need to talk about it we had the bank president talk to me and he wants to see the shrinking of the balance sheet as soon as july. that is the majority moving in that direction in the governing council to see the shrinking of the balance sheet or speed up the shrinking of the balance sheet. i guess it is too early to decide now of course, we have the periphery playing a bit of devil's advocate here because they are afraid of the spike in yields and for their debt they have the backstop facility in place in case there is an

unwanted tightening of financial conditions for the periphery to answer your question, yes, they are going to discuss it, i'm sure, and there might be at least some tentative signs we will get speeding of thes the shrinking of the balance sheet this summer. >> you are right to bring that up on the liquidity program from one year with the banks st stateside. it is now risky given treasury yields when we talk about europe and programs in place, we have banks loading up on the bonds. we are in negative yielding. there is strong moving and bonds have been dragged along with treasuries what does it mean how nervous the ecb could be about what has done to date and if it needs to be more creative if the

contagion continues? >> reporter: of course, they would need to get more creative if the contagion continues i think they would probably come up with some liquidity backstop for the euro area banks in order to alleviate the pressure from the banking system i don't think they will touch on rates. that is their corpse mandate. you see a rise in core inflation recently that is what we are getting today. you can look at the staff projections which will likely show once again that inflation, especially core inflation, will be still on the rise it will only come back over the horizon over three years where they want it to be i guess we have to differentiate when it comes to securing the liquidity of the banking system.

of course th, the ecb will say e are ready to secure that liquidity provision to the banks. they will keep on sticking to the interest rate path i guess it is premature to actually reduce the expectation for the terminal rate here for the euro area because inflation is what they care about and they made it clear they are willing to sacrifice growth for the sake of bringing in inflation having said that , at the same time, we may get reassurance of the liquidity backstop i guess reaction from the markets now by intervention of the swiss national bank and we are seeing a lot of stress getting out of the market again. >> excellent annette, thank you you will join us later on for decision time.

ecb decision time today from 14:00 cet. coming up on the show, credit suisse atshares pop after they secure a lifeline from the central bank we will have more after a short brk.ea

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no bank is totally safe from collapse that is what the hsbc uk ceo told me this morning when asked if we can see big bank collapses like svb >> i can't say it won't happen, but going over the last few days, it was interesting i was going about my normal business on friday and somebody would say we were acquiring another bank in two or three days, i would not have believed it this is the ability of working for a strong bank and i'm privileged we can move at this pace this is a decisive and strategic

plan this is a wonderful opportunity both for us and svb uk team. >> the u.s. federal deposit corp made friday the deadline for acquiring svb and signature bank they will work to facilitate the new auction. regulators tried to sell svb and signature last week before taking over the banks. very interesting i have to say the speed with which the uk regulators got hold of svb uk and found a buyer for it, hsbc over the weekend, compared with the longevity process in the states, for once, it is uk moving swiftly and affirmatively and having a good result >> keep in mind the size of the uk bank may be smaller and we

heard due diligence of five hours. you can imagine that structure >> larry finke is warning more shutdowns in the wake of the silicon valley bank collapse the crisis is the result of decades of losing money and other american lenders with a strong reliance on leverage are at risk. finke said this is similar to the crisis in the 1980s which saw over 1,000 banks fail. goldman sachs is cutting back growth forecast for the year it is under pressure as regional banks look to stockpile liquidity. goldman now expects the u.s. economy to expand by 1.2% in 2023 which is down 0.3% from the previous estimate.

pro subscr vscribers say big short investor steve eisman says we should be worried go to cnbc for more. and barclays two days ago was trading at 153 they have had a full rally nowhere near the declines of the week that is the same story across the board. ubs with relief at the moment it hasn't a takeover with the rival up 4.7%. credit suisse trading on the lows, but still up 21% there are so many questions, geoff and karen, that are remaining. not at least the fact that annette talked about with the crisis drawing a line under it, you can go back to rate hiking that is not the case

the question, geoff, and i know you can't answer this, but give more comment on it what are credit suisse shares worth? they were worth 2.8% on the back of the swiss lifeline. what is it worth what will the bank look like i'm sure the conversations behind you are exacerbated at least. >> reporter: absolutely. the obvious answer, steve, as you know, they are only worth what the market is prepared to pay. we are getting a fair and accurate reflection, i think, of the market's concerns of the restructuring plan at this stage and also about whether there will be at some stage down the road a move to break credit suisse up further. the market, obviously, is in a

fragile state as we know there are great concerns about what liability mismatching there may be in the financial system after this very long period of low interest rates that we've seen we understand the environment we are now moving into. the question is, is there full confidence in the restructuring program that's been laid out we know credit suisse has been very frank about the challenges and losses it is likely still to see through the rest of this year here. we know also there are some nuggets in the business. swiss local bank is strong there are very, very good wealth management operaoperations the question that i think the investors are still continuing to ask, though, as a whole, what is the bank actually going to

achieve over the next 12 or 18 months what a remarkable situation as one of our guests pointed out this morning that they had to effectively pay to have the investment bank business taken off their hands. very challenging going forward as always, we leave it to the market to make the wise decision about valuation. >> geoff, i want to bring up implications with the central bank there is an implication that credit is tightened to the real economy. here in europe, the lens of the ecb the concerns of the fiscal policy is under mining the policy with too much largeness with money on infrastructure promise. n -- projects. now credit is limited and concerns of liquidity or position, it may do the job for the ecb right?

>> reporter: yeah, there is always that potential. inevitably when you put your foot on the brake, the car will slow that is really what is happening here if there are concerns of the stability of the banking system in europe or worry if you get your money returned, that is risk there has a knock-on issue for the fee income for the banks karen, it is central for them to maintain confidence as they try to tackle inflation. >> geoff, more coverage from you coming up on "worldwide exchange." that is it for "squawk box" here in europe. the team will be back for decision time later on today for now, stay with cnbc. "worldwide exchange" is coming up next.

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it is 5:00 a.m. here at cnbc global headquarters. here is your top "five@5." wall street's wild ride. futures gaining at the open. and extending a lifeline to credit suisse after the all-time record low dragging the banking stocks with it shares are bouncing back we are live at credit suisse hq in a moment. back here at home, the reckoning rolls on after