Credit Suisse (NYSE: CS) is currently attempting to recover from an over 20% tumble at the market open, following reports that its largest shareholder is unwilling to further support the bank as it continues to struggle.
Saudi National Bank Chairman Ammar Al Khudairy in speaking with Bloomberg this morning commented “The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” when prompted on whether the Saudi National Bank would inject further capital into the Swiss bank. The bank currently holds a 9.9% interest in Credit Suisse.
The comments come as Credit Suisse attempts to enact a turnaround plan, a primary aspect of which is the spinout of CS First Boston, the investment bank arm of the Swiss bank. The Saudi National Bank Chairman maintained that his bank had zero interest in taking a stake in the spinout.
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The commentary resulted in the bank plunging over 20% at one point on European markets, with the reaction also taking several of its peers down with it, as highlighted by CNBC’s Julianna Tatelbaum.
Commenting on the contagion being felt through the European banking industry, Joost Beaumont, who is head of bank research at ABN Amro, said, “If regulators do not handle the Credit Suisse situation well, this will send shockwaves through the whole sector. To make matter worse, both sides of the Atlantic have banking issues.” Beaumont also commented that “investors judge that this bank needs to be rescued.”
Classified as a “systematically important financial institution,” the bank is the second largest bank in Switzerland, with assets of roughly $580 billion as of the 2022 year end. Despite this, the bank reported material weaknesses in its financial reporting within its annual report released yesterday.
Markets meanwhile are said to be pricing in a 47% probability of default for the bank within the last hour.
At the same time, its bonds are said to be currently trading at distressed levels.
Credit Suisse CEO Ulrich Koerner meanwhile reportedly stated in an interview with CAN this morning the liquidity of the bank is sufficient. “Our capital, our liquidity basis is very very strong. We fulfill and overshoot basically all regulatory requirements,” Koerner was quoted as stating.
Kyle Bass of Hayman Capital Management meanwhile currently expects the bank to be sold in distress within the next three weeks to a more capitalized bank, or risk failing entirely.
Credit Suisse is currently down over 14% to $2.14 on the NYSE.
Information for this briefing was found via Bloomberg, Twitter, Wall Street Journal, and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
