CS: Credit Suisse Slips After Comments From Top Backer, New Deal Secured
- Credit Suisse shares fell below 2 Swiss Francs yesterday after its main backer said no more support will be offered.
- A new funding agreement of $45bn from Switzerland's central bank somewhat quelled investor fears.
- Despite the support from Swiss National Bank, Credit Suisse is still in a spot of trouble.
Credit Suisse has been in a bit of trouble for a while now. After logging a 5-year share price drop of 88%, the bank enacted company-wide restructuring changes in an attempt to get its profitability back on track. So far, it looks as though those changes have had little material effect on its trajectory. However a new funding deal has brought a glimmer of hope to both CS and the wider banking sector.
Why was CS down yesterday?
Shares in Credit Suisse dropped sharply on Wednesday, after the bank’s largest backer, Saudi National Bank, announced that they would not provide any additional support – the bank owns just under 10% of Credit Suisse. CS dropped to as little as 1.75 Swiss Francs yesterday, as investors feared that its underperformance was likely to continue. In the last quarter of 2022, it stated that it was seeing a “significant increase” in net-asset outflows compared to the one before it.
A glimmer of hope
Today however, Credit Suisse has managed to turn the narrative around slightly – announcing that they have secured a loan of $45bn from Swiss National Bank. The news managed to quell investor concerns both for Credit Suisse, but also for the wider banking crisis that Credit Suisse’s collapse had the potential to cause. That being said, the bank is still in trouble – and hasn’t generated any profit since 2020.