Credit Suisse shares tumble, fueling more concerns about banking
Shares in Credit Suisse hit an all-time low on Wednesday, dealing a fresh blow to the health of the broader banking sector. Collapse of two American banks.
The Swiss bank’s stock was down 20% at $2 a share as of 2:29 a.m. ET. The stock fell hours after Credit Suisse’s top shareholder Saudi National Bank raised its stake in the bank due to limits imposed by regulators in various jurisdictions overseeing its investments. .
“If we go up. [a] 10% [stake]Ammar Al-Khudiri, Chairman of the Saudi National Bank, all the new rules apply to him whether it is our regulator or the Swiss regulator or the European regulator. told Bloomberg TV on Wednesday. “We are not inclined to get into a new regulatory regime.”
The Saudi backer’s decision not to provide further funding comes just a day after Credit Suisse rattled investors by revealing it had discovered “material weaknesses” in its 2021 and 2022 financial reports.
“[Credit Suisse] The group’s internal control over financial reporting was not effective because it did not design and maintain effective risk assessment processes to identify and analyze the risk of material misstatement of its financial statements,” the bank said in its annual statement. said ReportsReleased on Tuesday.
Credit Suisse came under scrutiny after concerns about the accuracy of its financial reporting and its relationship with investors melted away. Greencell Capital And Archigos Capital ManagementThat hurt the bank in 2021, costing it billions of dollars.
Credit Suisse posted a net loss of $8 billion in 2022, its biggest annual loss ever, according to the bank. Filing. Credit Suisse’s wealth management unit also posted net asset outflows of about $133 billion for 2022, SEC filings show.
Andrew Cunningham, chief Europe economist at Capital Economics, said those financial woes, as well as the recent collapse of tech-focused Silicon Valley Bank (SVB) and Signature Bank, are likely to weigh on the market’s reaction to the bank’s lead investor’s statements on Wednesday. has been accelerated.
“Great Concern”
“Credit Suisse has been a slow-moving car crash for years, it seems, but now today’s news is certainly happening in the SVB vortex,” he told investors in a report.
Cunningham called Credit Suisse’s struggles “a much bigger concern for the global economy” than the health of regional US banks like SVB. The Swiss company, which has a much larger balance sheet than SVB, is classified by financial regulators as a “global systemically important bank” and has close ties to financial institutions, including subsidiaries in the US.
“[T]His problems at Credit Suisse once again raise the question of whether this is the start of a global crisis or just another ‘deprivation’ case,” he wrote. The only bank that has struggled in recent years with weak profitability. Is.”
As a sale in Credit Suisse shares Fuel concerns Regarding the global banking system, the broader market has also pulled back. The S&P 500 fell 1.2 percent on Wednesday, while KBW Bank Index, which measures the performance of 24 national and regional banks, fell 3.4 percent.