Credit Suisse opens up the stock market and struggles to reassure

Credit Suisse’s action at the end of the day sharply pared its huge losses after the boss of Switzerland’s second bank attempted to reassure investors much jittery at any signs of weakness in the banking sector.

Regarded as the weakest link in the banking sector in Switzerland, the establishment saw its share price rise by up to 30% to reach a new historic low at 1.55 Swiss francs despite the intervention of its chairman, Axel Lehman, to reassure Saw a decline

At 3:30 pm GMT, an hour before closing, it was still down 15.5%.

During a conference for the banking sector in Saudi Arabia, its chairman, Axel Lehman, assured that the bank did not need government support.

It is “not an issue”, he stressed, adding that Credit Suisse rely on “solid financial ratios”, though without managing to reassure the markets.

Apart from these public statements, the bank as well as the financial authorities and the government remained silent throughout the day.

But according to the Financial Times, which cited three anonymous sources, Credit Suisse has sought a “sign of support” from the Swiss central bank and markets authority, FINMA, in vain.

The concern extends beyond the Alpine country’s borders.

French Prime Minister Elisabeth Borne thus called on Swiss authorities to resolve the bank’s problems and indicated that her finance minister would speak to his Swiss counterpart again today.

– Abyss –

This dizzying drop in the stock – the bank was worth more than CHF 7.2 billion in terms of market capitalization at the end of the afternoon – began after a statement by the chairman of Credit Suisse’s largest shareholder, the Saudi National Bank.

The Saudis came to the bank’s rescue in November by pouring into their capital. But the Saudi National Bank has “absolutely no intention” to inject more money “for a number of reasons”, its chairman Ammar al-Khudairy explained.

The simplest are “regulatory” issues, he said. The Saudi National Bank holds a 9.8% stake. But under Swiss law, FINMA must decide whether it has exceeded the 10% threshold.

In an interview with Reuters, Mr. al-Khudairi said he was “very pleased” with Credit Suisse’s restructuring program, referring to a “very solid” bank.

Founded in 1856, Credit Suisse is a pillar of the Swiss financial centre, contributing both to the development of the country’s railways and to the emergence of insurance giants such as Swiss Re or Swiss Life, or to the financing of large industrial companies. Ancestor of ABB.

But Credit Suisse has been in turmoil for two years since the bankruptcy of British financial company Greenseal, which marked the beginning of a series of scandals that weakened the bank.

Since March 2021, the stock has lost over 83% of its value.

“The pressure on Credit Suisse has hit an already troubled market,” Rabobank analyst Jan Foley told AFP.

– A “completely different world” –

The new shareholder statements struck a chord as investors worried about the risk of contagion following the collapse of US bank SVB.

“It looks like investors are getting more and more worried,” said Neil Wilson, analyst at Finalo, in a market comment.

But if Credit Suisse were to face “existential problems”, “we would be facing a whole other dimension. Letting go is really, really important,” he said. he insists.

Unlike SVB, Credit Suisse is one of 30 banks around the world considered too big to fail, which apply strict rules to be able to withstand shocks in the event of difficulty.

Contacted by AFP, the Swiss central bank, which has not yet spoken, declined to comment.

Credit Suisse began a major restructuring program in October in an attempt to recover.

But some shareholders ended up throwing in the towel, such as US investment firm Harris Associates, long its largest shareholder, which revealed last week that it had sold its entire stake in the bank.

In early February, Credit Suisse announced a net loss of 7.3 billion Swiss francs (about 7.4 billion euros) for fiscal year 2022 against the backdrop of massive withdrawals of funds from its customers and warned that there is still ” enough” is expected of the former. -Tax loss in 2023.