In addition, the bank announced early Thursday morning in Zurich that it would buy back certain euro and dollar bonds with a volume of three billion francs. With these steps, Credit Suisse (CS) wants to regain the confidence of investors. The bank’s shares fell by up to 30 percent to a record low of CHF 1.55 on Wednesday.
By the end of trading, the minus was reduced to 24 percent. However, this meant that the downturn of the past few weeks had accelerated further overall. The bank is struggling with a number of problems. Risky transactions in investment banking had caused a high loss last year. In addition, customers withdraw their funds and the supervisors recently objected to both the risk management and parts of the financial reporting.
With the steps announced during the night, “decisive measures to preventively strengthen” liquidity would be taken. This additional liquidity would support Crédit Suisse’s core business and clients. The SNB and the Swiss Financial Market Authority Finma had previously announced that they would provide the financial institution with liquidity if required. There is currently no evidence of a direct risk of contagion for Swiss institutions due to the problems of US banks, it said.
According to the announcement, bank boss Ulrich Körner said: “With these measures, we are strengthening Crédit Suisse as part of our strategic change in order to create added value for our customers and other stakeholders. We thank the SNB and Finma for implementing our strategic change.
On Wednesday evening, Federal Finance Minister Christian Lindner emphasized the stability of the German credit system in view of the uncertainty in the banking sector. “The federal government is in constant and intensive exchange with everyone involved,” said the FDP chairman on the ARD program “Maischberger”. “With the Bafin, we have an efficient financial supervisory authority, and we have the Bundesbank, which also has a tradition of political stability. We can therefore say very clearly: the German credit system – private banks, savings banks, cooperative institutions – is stable. And we also ensure that further.”
Crédit Suisse had already tried to calm bank customers on Wednesday. It is a “very well capitalized bank,” emphasized the head of Credit Suisse Switzerland, André Helfenstein, in an interview with the Swiss broadcaster “Blick TV”. The price slump is due to the fact that the bank stocks are under pressure because of the problems of US regional banks.
The collapse of several regional US banks recently triggered uncertainty in the banking sector. This was particularly evident on Wednesday at Crédit Suisse, which was already ailing. The bank’s shares fell in Zurich by more than 30 percent at times to a record low of 1.56 francs (1.59 euros) and closed at the end of trading with a decline of more than 24 percent.
Also on Wednesday, the Chairman of the Saudi National Bank, Ammar Abdul Wahed Al Khudairy, categorically ruled out additional support in an interview with Bloomberg TV. The bank is a major shareholder in Crédit Suisse, which last year reported a loss of 7.3 billion Swiss francs and massive withdrawals from client assets of 123 billion.
The bank was founded in 1856. According to its own statements, it has more than 50,000 employees./zb/hme/DP/zb
ZURICH (dpa-AFX)
Leverage must be between 2 and 20
No data
More news about Credit Suisse (CS)
Image sources: Pincasso / Shutterstock.com