Credit Suisse Stock Plummets as Shareholder Rules Out Financial Assistance
Credit Suisse Group AG’s recovery efforts are under pressure as the Swiss banking giant’s shares fell to a new record low on Wednesday, dragging down the broader market and the rest of the European banking sector. Credit Suisse’s shares, which are traded on the New York Stock Exchange (NYSE: CS), plummeted around 18% in premarket trading on Wednesday, with its largest shareholder ruling out providing further financial assistance to the troubled lender.
The Swiss bank’s stock plunged to the lowest level on record and its credit spreads surged as the company’s top shareholder ruled out increasing its stake due to regulatory constraints. This weighed on all European banks as investors quickly shied away from risk following the recent turmoil, with the pan-European Stoxx 600 equity benchmark falling more than 2%.[0]
Retail sales came out from the Commerce Department on the same day, showing sales fell 0.4% in February, in line with estimates vs. January's 3.0% surge.[1] The Federal Reserve might factor this light reading on sales into its thinking on a rate hike next week.[1] Bond yields fell, with the yield on the benchmark 10-year U.S. Treasury note moving down to 3.4% Wednesday morning from 3.6% Tuesday.[2] Oil also fell to new lows on the year, with WTI dropping more than 4% to below $70 a barrel.[3]
In an effort to improve profitability, Credit Suisse is currently engaged in a challenging three-year restructuring program.[4] Despite having changed its strategy twice in the last two years, the company has yet to appease investors or stop clients from leaving, and this could be made more difficult by the recent fall of Silicon Valley Bank, which has caused market jitters within the financial sector.[5] UBS Group AG’s CEO Ralph Hamers said he will not answer any “hypothetical questions” following the turmoil at Credit Suisse, while Saudi National Bank Chairman Ammar Al Khudairy ruled out increasing the bank’s stake in the lender.[5]
Overall, Credit Suisse’s efforts to return to profitability have been met with investor unease, leaving the bank’s leaders with an uphill battle to convince investors it can pull off an extensive turnaround. Updated on March 15, 2023 at 9:48 a.[6] ET.[7]
0. “Credit Suisse Top Shareholder Saudi National Bank Rules Out More Assistance” Bloomberg, 15 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-15/credit-suisse-top-shareholder-rules-out-more-assistance-to-bank-lf9gfhbr
1. “Dow Jones Futures Dive 650 Points On Renewed Banking Fears As Credit Suisse Crashes 28%” Investor's Business Daily, 15 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-dive-on-renewed-banking-fears-as-credit-suisse-crashes/
2. “Stocks, US Futures Reel Amid Credit Suisse Turmoil: Markets Wrap” Yahoo News, 15 Mar. 2023, https://news.yahoo.com/asian-shares-set-climb-banking-221157909.html
3. “Stock market news today: Futures plummet amid Credit Suisse turmoil, retail data” Yahoo News, 15 Mar. 2023, https://news.yahoo.com/stock-market-news-today-live-updates-march-15-2023-114153589.html
4. “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/
5. “Credit Suisse Top Holder Rules Out Investing More After Drop” Yahoo Finance, 15 Mar. 2023, https://finance.yahoo.com/news/credit-suisse-top-holder-rules-102008683.html
6. “Big Four US banks drop in pre-market wiping out gains as Credit Suisse shares plunge” Daily Mail, 15 Mar. 2023, https://www.dailymail.co.uk/news/article-11862725/Credit-Suisses-biggest-backer-says-cash-share-fifth.html
7. “Credit Suisse shares tumble to new record low as European banking sector reels” MarketWatch, 15 Mar. 2023, https://www.marketwatch.com/story/credit-suisse-shares-tumble-to-new-record-low-94e15e2
