Credit Suisse is in an existential crisis and markets are fearful. What’ll happen next?
Nick Sundich, March 16, 2023
Is Credit Suisse (NYSE:CS) in trouble? That’s what investors, both those invested in the Swiss bank and those who aren’t, appear to fear. But are they over-reacting?
No time to do stock research, but you still want to invest?
Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
With price targets, buy ranges, stop loss levels and Sell alerts too.
GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY
Credit Suisse shares slammed
Credit Suisse shares fell more than 30% at market open before closing the Wall Street trading day 14% lower than at the opening bell.
Credit Suisse (NYSE:CS) share price chart, log scale (Source: TradingView)
Credit Suisse has been through several scandals in recent years leading to a gradual outflow of funds by fed up clients.
It appears the two straws that broke the camel’s back overnight were, first, the bank revealing it had found ‘material weaknesses’ in its reporting prcesses for CY21 and CY22. And second, the Saudi National Bank (a 10% shareholder) ruling out providing the Swiss lender with any more financial assistance.
The cost of insuring the bank’s bonds against default for one year surged to levels not seen since the GFC and indicated the probability of defaulting to 10%.
Arguably, the collapse of SVB has made liquidity more of a worry for investors than it otherwise would be. But mitigating the damage was a statement by Credit Suisse a few hours ago. In it, the company said that,’ Credit Suisse meets the capital and liquidity requirements imposed on systemically important banks. If necessary, the Swiss National Bank (SNB) will provide CS with liquidity’. That seemed to calm the markets a bit.
What next for the company?
Will Credit Suisse go under? Not in the next week or so at least. However, the company itself has acknowledged something has to give, unveiling a turnaround plan at the end of last year. It is aiming to shift focus from investment banking towards less turbulent wealth management and to cut costs while increasing revenue.
But with interest rates rising at the fastest pace in history and the financial system in jitters, it is not a good time to be doing so.
Earlier this week, we argued that the Silicon Valley Bank collapse wouldn’t be a ‘Lehman’ moment, leading to a broader financial crisis. But if Credit Suisse goes under, it could be.
Stocks Down Under Concierge gives you timely BUY and SELL alerts on ASX-listed stocks!
With price targets, buy ranges, stop loss levels and Sell alerts too.
GET A 3-MONTH FREE TRIAL TO CONCIERGE TODAY
No credit card needed and the trial expires automatically.
Blog Categories
Get Our Top 5 ASX Stocks for FY25
Recent Posts
Paradigm Biopharmaceuticals (ASX:PAR): An osteoarthritis solution that could hit the market within 3 years
If you thought the were plenty of treatments for osteoarthritis already, Paradigm Biopharmaceuticals (ASX:PAR) is a company that has something…
Cann Group (ASX:CAN): Successfully producing GMP medicinal cannabis since 2017
Cann Group (ASX:CAN) is the first company in Australia that was issued a medicinal cannabis license, granted by the Australian…
CET1 ratio: If you invest in ASX bank stocks, here’s why it is an important metric to know
In this article we look at the Common Equity Tier 1 (CET1) ratio – what it is and why it…