Bloomberg - A significant shareholder's decision to forgo increasing its holdings in Credit Suisse Group AG has worsened the crisis at the renowned Swiss bank and left its leaders scrambling to restore confidence in the face of market chaos that is spreading from Europe to the US. Late last year, Saudi National Bank, which is now Credit Suisse's largest shareholder, announced that it would not increase its stake in the company above the current level of just under 10%, according to the bank's chairman.
Following the remarks, the Swiss bank's stock fell to its all-time low and its credit spreads increased. Due to investors' aversion to risk following the turmoil of the previous week, this contributed to the decline in all European banks. Within the next few months, Credit Suisse will complete a difficult restructuring that will see it spin out its investment banking division and concentrate on its core wealth management business. Its second strategy shift in as many years has so far failed to attract investors or stop client exodus, and the effort runs the risk of being made more difficult by market uncertainty in the financial sector following the failure of Silicon Valley Bank.
Ulrich Koerner, the bank's chief executive, urged patience on Tuesday while stating that the bank's financial situation is stable. Government assistance "isn't a topic," according to chairman Axel Lehmann, and the company's efforts to get back to profitability aren't comparable to the severe liquidity problems affecting smaller lenders in the US. Despite the fact that Al Khudairy's remarks were in line with the Saudi company's prior position, they assisted in driving Credit Suisse shares down as much as 31 percent to a new record low in Zurich, demonstrating the brittleness of bank stocks this week. After a brief reversal, shares were down 15% as of 3:31 p.m. m. to Zurich.
“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Ammar Al Khudairy said in an interview with Bloomberg TV on Wednesday. “In a jittery market, following the failure of Silicon Valley Bank in the US, Credit Suisse shares have sold off by more than 20% today,” Citigroup analysts wrote in a note to investors. Still, they said, comments by the Saudi National Bank Chairman appear “insufficient to explain the magnitude of the market move.”