ZURICH – Credit Suisse Group shares plunged and the cost of insuring its bonds against default were near a distressed level after the bank’s biggest shareholder ruled out any additional support.
Credit Suisse’s largest shareholder, Saudi National Bank, said it would not buy more shares in the Swiss bank on regulatory grounds.
“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Saudi National Bank chairman Ammar Al Khudairy said in an interview with Bloomberg TV on Wednesday. That was in response to a question on whether the bank was open to further injections if there was another call for additional liquidity.
Credit Suisse shares dropped as much as 30 per cent, triggering a 6 per cent plus fall in the European banking index, while five-year credit default swops (CDS) for the flagship Swiss bank hit a new record high, highlighting increasing investor concerns. BNP Paribas sank nearly 10 per cent.
Following comments by the company’s lead investor, Credit Suisse chief executive Ulrich Koerner spoke of the strength of the Swiss lender’s liquidity basis in an interview on Wednesday.
“Our capital, our liquidity basis is very, very strong,” Mr Koerner said. “We fulfil and overshoot basically all regulatory requirements.”
Mr Francois Lavier, head of financial debt strategies at Lazard Freres Gestion, said: “Markets are very sensitive to the negative news flow after the surprise of seeing a US bank disappear from one day to the other and the contagion that hit other US regional banks.”
“In a context where market sentiment is already weakened, not much is needed to weaken it even further,” Mr Lavier added.
Credit Suisse is in the midst of a complex three-year restructuring in a bid to return the bank to profitability. It was hard hit by the recent wave of bearishness triggered by Silicon Valley Bank’s demise, with its five-year CDS spreads hitting a record. Investors are increasingly worried about the health of banks following the collapse of Silicon Valley Bank.
Mr Koerner said in a Bloomberg Television interview on Tuesday that business momentum improved this quarter and that the bank attracted funds after the collapse of SVB. BLOOMBERG, REUTERS
