Commuters cycle past a bank branch of Credit Suisse Group AG in Basel, Switzerland, on Tuesday, October 25, 2022. Credit Suisse will present its Q3 earnings and strategy on October 27.
Stefan Wermuth | Bloomberg | Getty Images
Shares of Credit Suisse fell to a new low on Wednesday for a second straight day after a top investor in the embattled Swiss bank said it would be unable to provide more cash due to regulatory restrictions.
Trading in the bank’s plummeting shares was halted several times throughout the morning as it dipped below 2 Swiss francs ($2.17) for the first time.
related investment news
Swiss-listed Credit Suisse shares were down 19% at around 3:45 p.m. London time (11:45 a.m. ET), offsetting some of their previous losses after falling more than 30% at one point.
The fall in the share price triggered a broader sell-off among European lenders, who were already experiencing significant market turmoil due to the Silicon Valley Bank fallout. Some of the biggest fallers were France’s Société Générale, Spain’s Banco de Sabadell and Germany’s Commerzbank.
Several Italian banks were also subject to automatic trading breaks on Wednesday, including UniCreditFinecoBank and Monte dei Paschi.
Credit Suisse’s biggest investor, Saudi National Bank, said it was unable to provide the Swiss bank with further financial assistance, according to a Reuters report, leading to the latest leg lower.
“We can’t, because we would go above 10%. It’s a matter of regulation,” Ammar Al Khudairy, chairman of the Saudi National Bank, told Reuters on Wednesday. However, he added that SNB is happy with Credit Suisse’s transformation plan and suggested that the bank was unlikely to need additional cash.
The Saudi National Bank took a 9.9% stake in Credit Suisse last year as part of the Swiss lender’s $4.2 billion capital raise to fund a major strategic overhaul aimed at improving performance of investment banks and addressing a litany of risk and compliance errors.
Credit Suisse CEO Ulrich Koerner attempted to defend the bank’s liquidity base on Wednesday, saying it is “very, very strong,” Reuters reported, citing an interview with CAN.
Koerner added, “We meet and exceed virtually all regulatory requirements.”
Meanwhile, when Axel Lehmann, chairman of Credit Suisse, spoke to CNBC’s Hadley Gamble at a panel session in Riyadh, Saudi Arabia, on Wednesday morning, he declined to comment on whether his company would need any form of government support in the future. .
When asked if he would rule out any kind of help, Lehmann replied, “That’s not the point.”
“We’re regulated, we have strong capital ratios, a very strong balance sheet. We’re all hands on deck. So it’s not about that at all.”
The Swiss National Bank declined to comment on the movement in Credit Suisse’s share price, Reuters reported.
Investors also continue to assess the impact of the bank’s announcement made Tuesday “material deficiencies” in its financial reporting processes for 2022 and 2021.
Switzerland’s second-largest lender announced the sighting in its annual report, which was initially scheduled for release last Thursday but was delayed by a belated call from the US Securities and Exchange Commission.
The SEC discussion related to a “technical review of previously disclosed revisions to the consolidated cash flow statements for the years ended December 31, 2020 and 2019, as well as related controls.”
At the end of 2022, the bank announced that it saw “significantly higher withdrawals of cash deposits, non-renewal of maturing term deposits and net asset outflows at levels significantly higher than the rates of the third quarter of 2022”.
Credit Suisse saw clients withdraw more than CHF 110 billion in the fourth quarter as a series of scandals, legacy risks and compliance shortcomings continued to plague the company.
Correction: This story has been updated with the correct figure for Credit Suisse’s capital raise.