Credit Suisse shares plunged to a fresh all-time low for the second consecutive day on Wednesday, as a top investor in the Swiss bank said it would not be able to provide any more cash due to regulatory restrictions. The bank's plummeting stock was halted several times throughout the morning as it fell below 2 Swiss francs ($2.17) for the first time. Credit Suisse traded 17% lower at 2:10 p.m. London time, paring some of its earlier losses after dropping more than 30% at one point.
The share price rout renewed a broader sell-off among European lenders, which were already facing significant market turmoil as a result of the Silicon Valley Bank fallout. Several Italian banks on Wednesday were also subject to automatic trading stoppages, including UniCredit, FinecoBank, and Monte dei Paschi.
Credit Suisse’s largest investor, Saudi National Bank, said it could not provide the Swiss bank with any further financial assistance, according to a Reuters report, sparking the latest leg lower. “We cannot because we would go above 10%. It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters on Wednesday. However, he added that SNB is happy with Credit Suisse’s transformation plan and suggested the bank was unlikely to need extra money.
The Saudi National Bank took a 9.9% stake in Credit Suisse last year as part of the Swiss lender’s $4.2 billion capital raise to fund a massive strategic overhaul aimed at improving investment banking performance and addressing a litany of risk and compliance failures.
Credit Suisse CEO Ulrich Koerner on Wednesday sought to defend the bank’s liquidity basis, saying it is “very, very strong,” Reuters reported, citing an interview with CAN. Koerner added, “We fulfill and overshoot basically all regulatory requirements.”
Meanwhile, speaking to reporters during a panel session in Riyadh, Saudi Arabia, on Wednesday morning, Credit Suisse Chairman Axel Lehmann declined to comment on whether his firm would need any sort of government assistance in the future. When asked if he would rule out some kind of assistance, Lehmann answered, “That’s not the topic.”
“We are regulated, we have strong capital ratios, very strong balance sheet. We are all hands on deck. So that’s not the topic whatsoever.”
Investors are also continuing to assess the impact of the bank’s Tuesday announcement that it had found “material weaknesses” in its financial reporting processes for 2022 and 2021. The Swiss lender disclosed the observation in its annual report, which was initially scheduled for last Thursday but was delayed by a late call from the U.S. Securities and Exchange Commission.
The SEC conversation related to a “technical assessment of previously disclosed revisions to the consolidated cash flow statements in the years ended December 31, 2020, and 2019, as well as related controls.” In late 2022 the bank disclosed that it was seeing “significantly higher withdrawals of cash deposits, non-renewal of maturing time deposits and net asset outflows at levels that substantially exceeded the rates incurred in the third quarter of 2022.”