Credit Suisse shares dive as stability concerns spread
Shares in embattled Swiss lender Credit Suisse plunged beyond eight per cent today as fears over the banks’ stability spread in the wake of a profit warning last week.
The bank’s share price has been in a sustained slide since it revealed last Wednesday it expected to make a pre-tax loss of up to 1.5bn Swiss Francs, following a £74bn flood of withdrawals which caused it to breach some liquidity buffers.
Credit Suisse has been hit by a slowdown in the past months and said a “challenging” economic environment had also hit client activity across its divisions, with its investment banking suffering a sharp slump in fees as capital markets activity dried up.
The announcement spooked investors, with Credit Suisse shares now trading down over 14 per cent since the announcement.
Five-year credit default swaps, which investors users to insure themselves in the event of a default, also rocketed by 53 basis points today to a record high of 398 bps, according to data from S&P Global Market Intelligence.
It comes after Credit Suisse chiefs looked to soothe investor fears over the weekend. Boss of the bank’s Swiss unit said “some customers have withdrawn some of their money, but very few have actually closed their accounts.”
The Swiss bank has been scrambling for steadier ground after a string of crises in the past two years, including the ousting of chief Tidjane Thiam over a corporate espionage scandal in early 2020.
The bank was then rocked by the twin implosions of Archegos Capital and Greensill Capital in 2021 which left it nursing billions of dollars of losses.
The crises have shattered the lender’s status as a bastion of the European banking landscape and forced bosses into a major turnaround effort. Chief Ulrich Körner announced in October he would push ahead with splitting up the investment bank and cutting around 9,000 jobs globally.
Shareholders gave the bank the greenlight for a 4bn Swiss franc capital raise last week as part of the emergency recovery plans.