Credit Suisse Plunges to New Record Low, Drags European Banking Sector Down
On Wednesday, Credit Suisse shares fell to a new record low, dragging the entire European banking sector down with it. The Swiss banking giant's stock plunged 18% premarket after Saudi National Bank, its biggest shareholder, ruled out offering further financial assistance.[0] This comes days after two lenders collapsed in the US, causing a wave of bearishness to ripple across the global financial sector.
Credit Suisse is in the middle of a three-year restructuring effort in order to return the bank to profitability.[1] However, this is being further complicated by market unease in the wake of Silicon Valley Bank's collapse.[0] Chairman Axel Lehmann stated that government assistance is “not a topic” for the lender, and that it is inaccurate to compare the institution's current problems to the US bank's failure.[2]
Meanwhile, US retail sales fell 0.4% last month, showing that Americans cut back on spending in February after a splurge the month before.[3] Credit Suisse shares (NYSE:CS) plummeted 25% to a new record low under €2. Credit spreads surged as the company's top shareholder ruled out increasing its stake due to regulatory constraints.[0] This led to a swift reaction from investors to shy away from risk.
The Swiss lender is hoping to win back investor confidence and halt client outflows by spinning out its investment banking unit and focusing on its wealth management business. However, its efforts have so far failed to gain traction. Credit Suisse's Chairman Ammar Al Khudairy told Bloomberg TV that the bank is not open to further injections if there is another call for additional liquidity.[2]
Overall, Credit Suisse's stock plunge has put pressure on the broader European banking sector and the market as a whole. Investors are encouraged to stay informed about the situation as it continues to unfold.
0. “Credit Suisse Reels After Top Shareholder Rules Out Upping Stake” Yahoo Finance, 15 Mar. 2023, https://finance.yahoo.com/news/credit-suisse-top-holder-rules-102008683.html
1. “European bank stocks, Credit Suisse shares fall sharply” The Washington Post, 15 Mar. 2023, https://www.washingtonpost.com/business/2023/03/15/svb-banking-credit-suisse-stocks/
2. “Credit Suisse Chairman Says State Aid ‘Not a Topic'” Bloomberg, 15 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-15/credit-suisse-chair-says-state-assistance-not-a-topic-for-bank
3. “Dow falls 500 points as banking fears spread” CNN, 15 Mar. 2023, https://www.cnn.com/2023/03/15/investing/markets-bank-sector-march-15/index.html
