Credit Suisse stock plunged to a record low on Monday morning amid fears over the bank’s financial health.
Shares in the Swiss-based investment bank fell by as much as 10 per cent in early trading before recovering slightly to $3.72, down about 5 per cent from Friday’s close. The stock is down 25 per cent in the past three weeks, and 60 per cent for the year.
Experts and analysts have compared Credit Suisse’s financial situation to Lehman Brothers prior to its collapse in 2008 after its credit fault swaps, which provide investors with protection against financial risks, jumped in trading on Friday.
CEO Ulrich Koerner tried to calm anxieties in a memo to staff on Friday, sharing that the company has solid capital and liquidity.
“I know it’s not easy to remain focused amid the many stories you read in the media — in particular, given the many factually inaccurate statements being made,” Mr Korner told staff in the memo, obtained by The Independent.
“That said, I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank.”
$600 Billion: What Lehman Brothers held in assets when they crashed and took the economy with them.
$2800 Billion: What Credit Suisse and Deutsche Bank control in AUM. 4.6x more.
Credit Suisse is at a 'Critical Moment' now, says the CEO.
What lies in store for the world?🧵 pic.twitter.com/VIaMU7dSLX
— Graham Stephan (@GrahamStephan) October 2, 2022
Swiss banking giant Credit Suisse’s headquarters in Zurich
(Fabrice Coffrini/AFP via Getty Images)
A Credit Suisse spokesman told The Independent it is going to reveal a detailed restructuring plan when it releases third-quarter results at the end of October.
“We are just over three weeks away from announcing a strategy update which will include measures to strengthen the wealth management franchise, transform the investment bank into a capital-light, advisory-led banking business and more focused markets business, evaluate strategic options for the securitized products business,” the spokesman said.
“We also spent time over the weekend speaking to investors and clients to answer questions about the media coverage.”
Credit Suisse has been embroiled in several scandals in recent years. It was caught up in the collapse of UK lender Greensill Capital and US hedge fund Archegos Capital last year.
Invester Komal Sri-Kumar told CNBC on Monday that the US Federal Reserve’s rapid raising of interest rates could lead to a significant “credit event”.
“This may or may not be a Lehman moment,” Mr Sri-Kumar told CNBC.
The Federal Reserve last month hiked interest rates by three-quarters of a percentage point and made clear that more increases are in the making in hopes of taming inflation.
