Credit Suisse is under pressure, but short sellers appear to be eyeing another global bank
Investor anxiety about Credit Suisse has sent shares tumbling in recent days, but short sellers appear to be eyeing another European bank, data show. Paris-headquartered BNP Paribas was the most shorted European bank stock as of Monday, with a total of $1.68 billion in bets against the bank’s shares, according to data from S3 Partners. Short sellers profit when stocks fall. They borrow stocks to immediately sell them and plan to buy them back when the price is lower, profiting from the difference. More than 3.66% of traded shares in BNP Paribas were used to short it ̵[ads1]1; the highest percentage among 17 banks for which data is available, according to data analysis firm S3. While shares of the French bank have already fallen 28% this year, most analysts still have a buy rating on BNP Paribas, according to FactSet, with analysts giving the stock an average upside of 52%. Meanwhile, Credit Suisse was the eighth most shorted European bank, with 2.42% of its floating shares used to bet against it. Shares in the bank took a loss after plunging as much as 10% on Monday. So far this year, Credit Suisse shares are down more than 55%. The Financial Times reported on Monday that the Swiss bank’s executives were in talks with its major investors to reassure them amid growing concerns over the lender’s financial health. In a statement Monday, Credit Suisse told CNBC it will provide an update on its strategy review when the bank releases its third-quarter results on Oct. 27. “It would be premature to comment on any potential outcomes until then,” it said. In a separate note obtained by CNBC, Credit Suisse’s CEO urged people not to confuse “our day-to-day share price performance with the bank’s strong capital base and liquidity position.” Data shows the Swiss bank had the second-biggest increase in short-selling activity in September, with $167 million bet against the shares. “With the recent market volatility, we should see continued short selling in the stock as traders look to increase exposure,” S3 Partners said in a research note. Italian investment bank Mediobanca and Germany’s Commerzbank were the second and third most shorted stocks respectively, according to S3.
