The Swiss entity Credit Suisse sinks this Monday up to 11% in the stock market amid the doubts that its financial situation arouses. As reported by the Financial Times, executives of the entity have spent the weekend contacting large clients, partners and investors to reassure them about their liquidity and capital.
According to previous press reports, Credit Suisse had contacted investors to assess the possibility of raising capital. From Zurich he refuses, but the turbulence has already set in. With the fall of this Monday, its shares have pierced new historical lows and financing is becoming more and more expensive due to the continuous downgrades in the ratings it has suffered.
So far this year, its shares on the Swiss stock market have fallen by 60%. The capitalization is a third of what it had in March. "Credit Suisse has a strong capital, liquidity and balance sheet position. Share price developments do not change this fact," read a note sent to employees on Friday, according to the Financial Times. The doubts are transferred to the sector, with the European banking index leaving 2%.
Although the Swiss branch and international private banking are strong, doubts center on the entity's investment banking. The management is expected to present a plan to relaunch the business on October 27, when presenting the results of the third quarter. The plan would go through dividing investment banking into three and creating a bad bank for higher-risk or expendable assets. Bloomberg claims it will be accompanied by thousands of layoffs.
Group CEO Ulrich Körner has asked employees to stay "as close as ever to their customers and colleagues." Körner, appointed at the end of July, has had to contend with market speculation, departures from his bankers and doubts about capital as he seeks to chart a way forward. The bank is at a "critical moment," he acknowledged.
The first doubts of investors about the situation of the Swiss giant were reflected in the CDS, a financial product that serves to hedge against a fall in the entity. The cost of insuring Credit Suisse bonds from default rose 15% last week, to levels not seen since 2009.
