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Credit Suisse shares fall despite moves to calm investor concerns

  • Credit Suisse caught in the market turmoil ahead of the renewal
  • Shares fell as much as 10% in early trading on Monday
  • The bank’s euro-denominated bonds reach record low levels
  • The Swiss bank says its capital and liquidity are strong

ZURICH, Oct 3 (Reuters) – Credit Suisse ( CSGN.S ) shares fell as much as 10% on Monday, reflecting market concerns ahead of a restructuring plan due to report third-quarter results in late October.

Swiss regulator FINMA and the Bank of England in London, where the lender has an important hub, were monitoring the situation at Credit Suisse and working closely together, a source familiar with the situation said.

Credit Suisse’s recent problems were well known and there had been no major developments recently, the source added.

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The Bank of England, FINMA and the Swiss Ministry of Finance declined to comment.

Chief Executive Ulrich Koerner told staff last week that Credit Suisse, whose market capitalization had fallen to 9.73 billion Swiss francs ($9.85 billion) on Monday, has solid capital and liquidity. read more

And bank executives spent the weekend reassuring big customers, counterparties and investors about liquidity and capital, the Financial Times reported on Sunday. read more

A spokesman for Credit Suisse declined to comment on the FT report, which said the weekend talks followed a sharp rise in spreads on the bank’s credit default swaps (CDS), which provide protection against a company defaulting on its debt.

Credit Suisse’s euro-denominated bonds fell to record lows, with the Swiss bank’s longer-dated bonds suffering the sharpest declines. read more

In July, Credit Suisse announced its second strategy review in a year and replaced its CEO, bringing in restructuring expert Koerner to scale back investment banking and cut more than $1 billion in costs. read more

The logo of Swiss bank Credit Suisse is seen in an office building in Zurich, Switzerland September 2, 2022. REUTERS/Arnd Wiegmann/File image

It has said it is considering measures to strengthen its flagship wealth management franchise, scale back its investment bank into a “capital-light, advisory” business and evaluate strategic options for its securitized products business.

Reuters, citing people familiar with the situation, reported last month that Credit Suisse was seeking investors for new money as it sought to overhaul. read more


JP Morgan analysts said in a research note that, based on the financials at the end of the second quarter, they see Credit Suisse’s capital and liquidity as “healthy”.

Given that the bank has indicated a near-term intention to maintain its core capital ratio of 13-14%, the closing ratio for the second quarter is well within this range and the liquidity coverage ratio is well above requirements, the analysts added.

Credit Suisse had total assets of 727 billion Swiss francs ($735.68 billion) at the end of the second quarter, of which 159 billion francs were cash and owed to banks, while 101 billion were trading assets, it noted.

While Credit Suisse’s CDS spreads have increased, this should be seen in the context of increased credit spreads across the sector, which was expected in a rising interest rate environment with ongoing macroeconomic uncertainty, the analysts said.

In the past three quarters alone, Credit Suisse’s losses have totaled nearly 4 billion Swiss francs. Given the uncertainty, the bank’s financing costs have increased. Deutsche Bank analysts estimated in August a capital deficit of at least 4 billion francs.

Credit Suisse shares, which have fallen by more than half this year, came off early morning lows and fell 7.4% to 3.68 Swiss francs by . 0927 GMT.

($1 = 0.9882 Swiss francs)

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Reporting by Michael Shields and Oliver Hirt in Zurich; Additional reporting by Lucy Raitano and Huw Jones in London; Editing by Noele Illien, David Goodman and Alexander Smith

Our standards: Thomson Reuters Trust Principles.

Michael Shields

Thomson Reuters

Switzerland and Austria Bureau Chief leads a multimedia team of journalists based in Zurich, Geneva and Vienna covering Swiss and Austrian spot news, features, photos and videos with first-hand reporting from dozens of countries on three continents since 1987.

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