Credit Suisse Shares Plummet as US Retail Sales Fall and Saudi Investor Withdraws Funds
Credit Suisse Group AG saw its shares fall to a record low on Wednesday, dragging down the rest of the European banking sector with it.[0] The Swiss banking giant’s share price plummeted 18% premarket to a new record low after the bank’s top shareholder ruled out offering any further financial assistance to the troubled lender.[1]
The bank cited “material weaknesses” in its financial reporting Tuesday and got rid of executive bonuses, putting further pressure on the stock.[2] The news sent Credit Suisse’s five-year CDS spreads to a record high, and all other European banks lower as investors shied away from risk after the turmoil of the past week.[1]
Chairman Axel Lehmann said Wednesday that government assistance “isn’t a topic” for the lender and that it wouldn’t be accurate to compare the Swiss bank’s current problems with the recent collapse of Silicon Valley Bank.[3] At the Financial Sector Conference in Saudi Arabia, he spoke.[4]
Last month, US retail sales experienced a 0.4% decrease, demonstrating that American consumers spent less in February following their high levels of expenditure in January.[5] The Dow Jones Industrial Average briefly dived more than 500 points Wednesday, as Credit Suisse crashed 28% on reports the company's largest investor, Saudi National Bank, withdrew funding.[6]
In an effort to make the bank profitable again, Credit Suisse is undergoing a complicated three-year restructuring process.[7] The bank is spinning out its investment banking unit and focusing on its key wealth management business. The company's second major change in strategy in two years has not persuaded investors or stopped customers from leaving, and this endeavor could be further complicated by the financial market's uneasiness following the fall of Silicon Valley Bank.[1]
0. “Credit Suisse shares tumble to new record low as European banking sector reels” MarketWatch, 15 Mar. 2023, https://www.marketwatch.com/story/credit-suisse-shares-tumble-to-new-record-low-94e15e2
1. “Credit Suisse Reels After Top Shareholder Rules Out Upping Stake” Yahoo Finance, 15 Mar. 2023, https://finance.yahoo.com/news/credit-suisse-top-holder-rules-102008683.html
2. “Nasdaq, S&P, Dow slide on financial sector jitters sparked by Credit Suisse rout (SP500)” Seeking Alpha, 15 Mar. 2023, https://seekingalpha.com/news/3947589-nasdaq-sp500-dow-jones-stock-market-credit-suisse-financial-jitters
3. “Credit Suisse Chairman Says State Aid ‘Not a Topic'” Bloomberg, 15 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-15/credit-suisse-chair-says-state-assistance-not-a-topic-for-bank
4. “Credit Suisse Default Swaps Are 18 Times UBS, 9 Times Deutsche Bank” Yahoo Finance, 15 Mar. 2023, https://finance.yahoo.com/news/credit-suisse-default-swaps-18-093144418.html
5. “Dow falls 500 points as banking fears spread” CNN, 15 Mar. 2023, https://www.cnn.com/2023/03/15/investing/markets-bank-sector-march-15/index.html
6. “Dow Jones Dives 500 Points On Renewed Banking Fears As Credit Suisse Crashes 28%” Investor's Business Daily, 15 Mar. 2023, https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-dive-on-renewed-banking-fears-as-credit-suisse-crashes/
7. “European bank stocks, Credit Suisse shares fall sharply” The Washington Post, 15 Mar. 2023, https://www.washingtonpost.com/business/2023/03/15/svb-banking-credit-suisse-stocks/
