Shares in Credit Suisse tanked by 10% following reports that the Swiss Bank’s chief executives were talking with investors about the firm’s financial health.
The drop followed a report in the Financial Times that said the Swiss lender was looking to raise capital. On Tuesday 27 September, the firm’s shares were trading at €4.42, but had dropped by late Monday to €3.90, something of a recovery after hitting €3.68 earlier that day. Worryingly, the firm’s shares were trading €11.90 in February 2021 before going on a steady, downward curve.
As CNBC reported: “Shares of Credit Suisse plunged nearly 10% in Europe’s morning session Monday, after the Financial Times reported the Swiss bank’s executives are in talks with its major investors to reassure them amid rising concerns over the lender’s financial health. One executive involved in the talks told the publication that teams at the bank were actively engaging with its top clients and counterparties over the weekend, adding that they were receiving ‘messages of support’ from top investors.”
Elsewhere, Reuters has reported that the regulators in the UK and in Switzerland were keeping a close eye on the situation and ‘working closely together’.
It spears the Credit Suisse has been in trouble for some time. Reuters said that the firm announced in July its second strategy review in a year, replacing its CEO with Ulrich Koerner, an expert at restructuring. It said that the bank was aiming to scale back investment banking while cutting more than $1bn in costs.
Meanwhile, Bloomberg has reported Koerner saying that the bank is at a ‘critical moment’.
Bloomberg reported: “In the second carefully worded memo sent to reassure staff in as many weeks, Koerner told employees not to confuse the ‘day-to-day’ stock price performance with the Swiss firm’s ‘strong capital base and liquidity position’. The shares are hovering near a record low.”
Credit Suisse is not the only firm seeing shocks. Shares in Deutsche Bank have fallen from €14.40 per share in February 2022 to €7.67 at the beginning of the week. In fact, the price per share in Deutsche Bank has fallen from €93.04 since May 2007.