Banks: Is this a banking crisis – how worried should I be?

The news is full of emergency meetings, central banks offering credit lifelines and tumbling bank shares.

No wonder people are asking: is this the start of another financial crisis?

Politicians, including the UK prime minister, and central banks, say the situation is now stable. But banking shares have continued to fluctuate.

So how bad is this and what does it mean for you?

Credit Suisse is being taken over by UBS. Both are giant Swiss banks, but their investment banking arms operate all over the world.

Swiss banking has the ultimate reputation for financial stability, so the slide into uncertainty for Credit Suisse, and the shotgun marriage to UBS, have left the Swiss rather dazed.

Two US banks had already gone under this month – Silicon Valley Bank and Signature Bank – both catering largely to the tech sector. While those are the biggest bank failures in the US since 2008, neither was anywhere near the size of Credit Suisse.

No other banks have collapsed, but central banks were worried enough to announce new measures to make extra cash available to make sure financial transactions continue as normal.

That is the kind of action that was taken during the financial crisis in 2008 and at the start of the pandemic, designed to shore up confidence and make sure banks can still make loans and pay out to customers who want to take their money out.

The Bank of England admitted it had been watching closely as Credit Suisse’s fate was determined in a marathon meeting over the weekend, but said there was no reason to worry about a knock-on effect on UK banks.

The UK banking system was “well capitalised and funded, and remains safe and sound” it said.

Both UBS and Credit Suisse have London operations, managing money for wealthy clients and advising on mergers and investments and there may be some job losses where the two banks’ businesses overlap.

Bank shares have certainly had a wobble over the past week, as confidence was shaken.

But there is no reason to expect any further direct impact on UK banks, from either Credit Suisse’s demise, or the collapse of the smaller US lenders.

Credit Suisse had problems all of its own – missteps over risk management going back years, scandals it was caught up in, including money laundering, and last year it reported a heavy loss.

But it found itself in a sudden downward spiral last week, despite a $50bn (£41bn) emergency lifeline from the Swiss National Bank, and its customers began shifting their funds to other banks.

The US bank casualties faced different challenges. Signature took a hit from recent big…