Trading in Credit Suisse shares was halted as they fell as much as 21% on Wednesday, compounding nearly a week of consecutive losses and hitting a new all-time low as the Swiss bank struggles to overcome an array of controversies and a day after it acknowledged “material weaknesses” in its financial reporting.
The share plunge hit a new all-time low for the bank.
The decline comes a day after it acknowledged “material weaknesses” in its financial reporting processes that could lead to “misstatements” in its financial reports and that clients had pulled billions from the bank.
Chairman Axel Lehmann on Wednesday said the bank has a “very strong balance sheet” and is “all hands on desk” to address any problems.
Lehmann dismissed the notion of any government assistance for the bank and said it is “not the topic whatsoever.”
The bank’s top shareholder, Saudi National Bank, ruled out injecting more funds in the Swiss bank, according to Bloomberg.
Ammar Al Khudairy, the Saudi bank’s chair, said it would “absolutely not” be investing any more money in the beleaguered institution, not least for “regulatory and statutory” reasons.
What To Watch For
The fall on Wednesday sets Credit Suisse up for its seventh consecutive day of losses.
In its delayed annual report for 2022 on Tuesday, Credit Suisse revealed high cash outflows and said it found weaknesses in its financial reporting. It scrapped annual bonuses for top executives and said management was working to strengthen its risk and control frameworks. Investors responded poorly and shares fell for the sixth consecutive day. The bank’s poor performance in 2022 follows years of controversies including links with investment firm Archegos and supply chain financing firm Greensill Capital—which collapsed and cost the bank billions—revelations numerous clients were involved with corruption, torture, trafficking and other serious crimes and a spying scandal. The bank has launched numerous efforts to transform the business, including multiple changes of senior management.
Credit Suisse headed a broader rout of bank stocks in Europe on Wednesday. Shares of BNP Paribas and Société Générale fell more than 10% in Paris, Santander more than 7% in Madrid and Deutsche Bank 8% in Frankfurt. The downturn comes amid wider financial concerns following the failure of U.S. banks Silicon Valley Bank and Signature.
Another Credit Suisse Crisis: Bank Finds ‘Material Weaknesses’ In Its Financial Reporting (Forbes)