Press "Enter" to skip to content

Credit Suisse In Trouble

Credit Suisse shares tumbled for the second straight day Wednesday, hitting new record lows, after the biggest investor in the troubled Swiss bank said that he could not offer more money because of regulatory restrictions. 

Trading in the bank’s slumping shares was stopped multiple times during the morning, when it fell for the first time below 2 Swiss francs ($2.17). Swiss-listed Credit Suisse shares ended the day 24 percent lower, having retraced some early losses after falling over 30 percent at one point.

The stock-price plunge revived a wider sell-off by European lenders, who were already facing considerable market disruption from the Silicon Valley bank crash. Several Italian banks were also hit by automated trading stops Wednesday, including UniCredit, FinecoBank and Monte dei Paschi. 

Credit Suisse’s biggest funder, the Saudi National Bank, said it was not in a position to offer the Swiss bank further financial help, according to Reuters, prompting a latest fall. 

“We cannot because we would go above 10%. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters on Wednesday. He did say SNB was happy with Credit Suisse’s transformation plan and suggested the bank was unlikely to need more money.

Saudi National Bank took a 9.9% stake in Credit Suisse last year in a $4.2-billion capital raising by the Swiss lender to finance a major strategic review to boost the investment banks results and tackle its raft of risks and regulatory compliance failings.

Credit Suisse chief executive Ulrich Koerner sought on Wednesday to defend the bank’s liquidity base, saying that it is “very, very strong,” according to Reuters, citing a CNA interview. 

Meanwhile, speaking with CNBC’s Hadley Gamble at a roundtable session in Riyadh, Saudi Arabia, Wednesday morning, Credit Suisse chairman Axel Lehmann declined to comment on whether his firm will require government help in the future. 

“We are regulated, we have strong capital ratios, very strong balance sheet. We are all hands on deck. So that’s not the topic whatsoever.”

The Swiss National Bank declined to comment on Credit Suisse’s stock-price moves, according to Reuters.

Investors are also continuing to weigh in on the implications of the bank’s Tuesday announcement that it found “material weaknesses” in its financial reporting processes for 2022 and 2021. Switzerland’s second-largest lender disclosed those observations in an annual report originally scheduled last Thursday, only to be delayed due to a delayed U.S. Securities and Exchange Commission filing. 

Credit Suisse saw customers withdraw more than 110 billion Swiss francs during the fourth quarter, while a series of scandals, legacy risks and regulatory dysfunction continued to dog it.

0 0 votes
Article Rating
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x