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Credit Suisse is shedding another 5% as traders spend emergency liquidity

by SuperiorInvest

Credit Suisse Group AG office building at night in Bern, Switzerland, Wednesday, March 15, 2023.

Stefan Wermuth | Bloomberg | Getty Images

Credit Suisse shares fell 5% in early trading on Friday. sharply above the previous session as the hired lender said he would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.

Shares pared some losses and were trading 3.4% lower by 20:00 London time.

This week’s crackdown by Swiss authorities, which also reaffirmed that Credit Suisse met capital and liquidity requirements for “systemically important banks,” sent shares jumping more than 18% on Thursday after closing at an all-time low on Wednesday.

The decline came after a major investor, Saudi National Bank, said it would not provide the bank with any additional cash due to regulatory requirements, complicating a downward spiral in Credit Suisse’s share price that began when its annual results were delayed due to financial reporting concerns.

The bank is undergoing an extensive strategic review aimed at restoring stability and profitability after a litany of losses and scandals. The restructuring includes the spin-off of the investment bank to create US-based CS First Boston, a sharp reduction in exposure to risk-weighted assets and a $4.2 billion capital increase partly financed by a 9.9% stake acquired by Saudi National Bank.

However, capital markets reacted with skepticism. At the same time, Credit Suisse saw a huge outflow of assets under management credit default swapswhich insures bondholders against a company’s default, soared to new record highs this week.

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