Credit Suisse goes back on the stock market, but investors remain vigilant
Credit Suisse bank, based in Zurich, had its worst stock market session in its history on Wednesday.
Credit Suisse wants to continue its restructuring, on the strength of a gigantic loan of the central bank. The hypothesis of a takeover of the banking giant is resurfacing, however, fueled by a market capitalization of less than 10 billion francs (less than C$15 billion).
Switzerland's second-largest bank suffered its worst trading session in its history on Wednesday, prompting the central bank to come to its rescue by making available up to 50 billion francs (nearly C$75 billion) in liquidity to reassure the markets.
The stock recovered on Thursday (+19% at the close), also helped by the Swiss National Bank (SNB), which insisted on the fact that there was no risk of contagion between the difficulties of certain banks in the United States and the Swiss financial market.
The Swiss government held a special meeting on Thursday during which it was briefed on the situation by the Swiss financial sector regulator FINMA and by the SNB, Swiss news agency ATS reported. The government has not commented on this.
On CNBC, Saudi National Bank Chairman Ammar Al-Khudairy, whose remarks sparked a storm on Wednesday amid extreme nervousness about the banking sector following the collapse of Silicon Valley Bank in the United States United States, believed that the market is looking for excuses to validate its concerns.
According to Al-Khudairy, nothing has changed, and he remains very optimistic on the restructuring of Credit Suisse.
Ulrich Körner, head of Credit Suisse, considered decisive the measures announced in the middle of the night in Europe and assured that the bank continues [its] transformation strategic.
The Zurich institution is one of 30 global banks considered too big to fail and must therefore have adequate reserves to weather a crisis.
However, for Analysts at U.S. bank J.P. Morgan say the question is not about Credit Suisse's capital, which far exceeds regulatory requirements, but about market confidence in the face of a complex investment banking restructuring and capital outflows .
“The status quo is no longer an option.
— Analysts at J.P. Morgan Bank
Analysts at the U.S. bank are considering several scenarios, including a complete shutdown of investment banking operations or a takeover by another bank, with UBS as a possible option.
Contacted by AFP, its Swiss competitor UBS declined to comment.
Faced with a series of scandals that have weakened the bank, management launched a major restructuring in October which plans to separate the investment bank from the rest of its activities in order to refocus on wealth management, asset management and on the Swiss branch, active in retail banking and loans to SMEs.
But the bank continued to accumulate setbacks. As early as February, it said it expected a substantial pre-tax loss for 2023 even as it disclosed a net loss of 7.3 billion francs (about C$10.8 billion) for 2022. /p>
It also suffered massive withdrawals of money from its customers which amounted to 110.5 billion francs (about C$163 billion) in the fourth quarter.
According to Christian Schmidiger, an analyst at the Zürcher Kantonalbank, the question now is what will be the effects of the SNB's aid on capital outflows.
In fact, investors are impatient to see the bank put its affairs in order.
Each bad news counts twice, underlined Dieter Hein, analyst of Baader Helvea , in a stock commentary, as the stock has become very volatile in the face of mounting setbacks.
According to Vontobel analyst Andreas Venditti, the Central bank assistance is a strong signal that he hopes will calm markets and stop the downward spiral.
“ However, it will take time to fully regain confidence.
—Vontobel Analyst Andreas Venditti
After losing up to 30% the day before, the bank's stock rebounded more than 32% at opening. It closed the session up 19.15% at 2.022 Swiss Francs (C$2.985).