Swiss banking giant Credit Suisse on Wednesday saw its shares fall to a new record low, pressuring the broader market and the rest of the European banking sector. Credit Suisse (NYSE:CS) shares plunged around 18% premarket on Wednesday to a new record low after the bank’s top shareholder ruled out offering further financial assistance to the troubled lender.
The stock of the Swiss bank dropped to the lowest point ever seen, and its credit spreads rose, as the major shareholder of the company declared that they could not raise their stake due to regulatory issues. The reaction of investors, who are quick to shy away from risk after the events of the past week, has caused all European banks to suffer.[0]
The drop in Credit Suisse shares comes after the bank cited “material weakness” in its financial reporting Tuesday and got rid of executive bonuses. The biggest backer, Saudi National Bank, said it won’t provide it with further financial help, adding to the troubles of the Swiss lender.[1]
In an effort to make Credit Suisse profitable again, the bank has embarked on a challenging three-year restructuring process.[2] Despite two years of strategic pivoting, the company has been unable to garner investor confidence or stop the decline in clients. This effort could be further hindered by the instability of the financial market following the failure of Silicon Valley Bank.[0]
At the same time, US retail sales fell 0.4% last month and the Dow Jones Industrial Average dropped more than 1.7%, or more than 500 points on Wednesday morning.[3] Credit Suisse’s Chairman Axel Lehmann said Wednesday that government assistance “isn’t a topic” for the lender and that it wouldn’t be accurate to compare the Swiss bank’s current problems with the recent collapse of Silicon Valley Bank.[4] This serves as a reminder of the fragility of the banking sector and the need for investors to remain cautious.
0. “Credit Suisse Reels After Top Shareholder Rules Out Upping Stake” Yahoo Finance, 15 Mar. 2023, https://finance.yahoo.com/news/credit-suisse-top-holder-rules-102008683.html
1. “Stocks making the biggest moves premarket: Credit Suisse, Lennar, PacWest & more” CNBC, 15 Mar. 2023, https://www.cnbc.com/2023/03/15/stocks-making-the-biggest-moves-premarket-cs-len-pacw.html
2. “European bank stocks, Credit Suisse shares fall sharply” The Washington Post, 15 Mar. 2023, https://www.washingtonpost.com/business/2023/03/15/svb-banking-credit-suisse-stocks/
3. “Stocks drop as fears grow about the global banking system” NPR, 15 Mar. 2023, https://www.npr.org/2023/03/15/1163640413/credit-suiss-banks-silicon-valley-bank-signature-bank
4. “Credit Suisse Chairman Says State Aid ‘Not a Topic’” Bloomberg, 15 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-15/credit-suisse-chair-says-state-assistance-not-a-topic-for-bank