The Bank of England has insisted people’s money is “safe” after another industry rescue.
Troubled Credit Suisse was bought by fellow Swiss banking group UBS for £2.7billion in a rushed deal.
It followed the recent collapse of two US lenders.
Authorities are trying to prevent unlinked problems spreading throughout the global banking system, and a repeat of the financial meltdown of 2008.
The Bank of England said: “The UK banking system is well capitalised and funded, and remains safe and sound.”
Shares in Credit Suisse crashed 60% at one stage yesterday.
Those in UBS, Switzerland’s biggest bank, initially fell but then recovered.
The takeover has sparked job fears among the two banks combined 120,000 strong workforce.
Credit Suisse has 5,000 UK staff and UBS has offices in London, Birmingham, Manchester, Leeds, Newcastle and Edinburgh.
Despite being rescued, Credit Suisse big hitters could still net bonuses.
Mark Yallop, a former UK chief executive of UBS, said the takeover of Credit Suisse “should bring a good degree of confidence back to the banking market more generally.”
German Chancellor Olaf Scholz insisted: “The situation of not comparable to 2008/09” - referring to the global financial meltdown 15 year ago.
How the banking turmoil could affect you
- Interest rates
One factor behind the current problems is the impact of central banks raising rates after years of cheap borrowing.
The Bank of England will vote this Thursday on whether to up interest rates again.
Its base rate is currently 4%, but economists are now in two minds about whether it will press ahead with another hike.
That has implications for millions of borrowers, savers and businesses.
- Mortgage lending
Although there is no sign of it yet, fears of what may be down the line could deter banks from lending.
Susannah Streeter, head of money and markets at retail investment broker Hargreaves Lansdown, said: “The worry is that overall banks will become more cautious in their lending, which could be another blow for already fragile housing markets in particular.”
- Shares
If you dabble in shares, then the past few weeks have been a painful watch.
After reaching an all-time high of 8,000 in mid-February, the FTSE100 index has been falling since. It now stands at around 7,400.
The banking turmoil has been one factor behind the sharp fall, and the longer it goes on the worse it could get.
That said, experts insist investors need look over longer term.
- Fuel prices
Oil prices have dropped to their lowest in 15 months on concern that risks in the global banking sector could spark a recession.
Brent crude was trading at just $72 a barrel yesterday.
A falling oil price has widespread implications, the longer it goes on.
One could be lower fuel prices for drivers, assuming that feeds through to wholesale prices and forecourts pass it on.
- Inflation
Last year’s spike in oil prices - when they hit $100 a barrel - was a factor in a surge in inflation.
Lower oil prices could therefore take more of the heat out of inflation, which has already begun to ease a bit.
But UK inflation is still at just over 10%, five times the Bank of England’s 2% target, hence why another rate rise this Thursday is possible.
- Food prices
While there is no signs of it yet, a lower oil price could ease pressure on all sorts of business costs.
That could eventually feed through to food prices - one area where prices are still rising.
- Economy
A healthy banking system is vital for a healthy economy.
The UK economy is already in the doldrums, so anything that makes it weaker could yet tip it into recession.
The Bank of England is confident that can be averted, and the UK financial system is strong.
A weaker economy increases the risk of job losses, and deters firms from expanding.
- Gold price
Gold is seen as a safe haven in troubled times.
So it is no surprise that demand for the yellow metal has risen on the back of the banking jitters.
The traded price of gold slipped to £1,600 an ounce yesterday.
But prices have rallied more than $100 (£81) since the collapse of Silicon Valley Bank earlier this month.
You don’t need to have a gold bar under your bed to benefit. Gold jewellery could be worth more too.
- Your savings
The mantra for now is very much “keep calm and carry on”.
As it stands, the events in Switzerland’s banking system and a very small number of smaller US banks won’t impact your savings. And long may that continue.
Secondly, there are protections in place of those with banks and other providers authorised by the Financial Conduct Authority.
And those covered by the Financial Services Compensation Scheme get up to £85,000 protection.
- Pensions
Those with a defined contribution pension are likely to be receiving their annual statement around now.
It might not make for pleasing reading, as the value of assets in your pension pot is likely to have come down.
The more stocks and shares fall, the more those assets will decline.
Conversely, if you are about to retire, you might be better off when you buy an annuity - a product that pays you a regular income for the rest of your life.
