<p>Credit
Suisse shares reached another record-low for a fifth trading session in a row,
after Saudi National Bank, the embattled bank’s biggest investor, revealed it would
not be able to provide any further financial aid in the future, as stated in Reuters report.</p><p>Credit Suisse in Crisis
After Saudi National Bank Update </p><p>At the time
of writing, Credit Suisse shares on the Swiss SIX <a href=”https://www.financemagnates.com/terms/e/exchange/” class=”terms__main-term” id=”b5da6e64-2afe-421d-9b81-16404b7d59d6″ target=”_blank”>exchange</a> are losing around
17% of their value and slipping to EUR 1.86. Earlier this week, Finance
Magnates reported that the bank was deepening historic lows in response to
uncertainty in the global banking sector following last week’s collapse of Silicon Valley
Bank (SVB). </p><p>While the
valuations of most major institutions have begun to rebound after the initial panic
calmed down, Credit Suisse’s deepening problems are <a href=”https://www.financemagnates.com/institutional-forex/credit-suisse-shares-hit-all-time-low-following-silicon-valley-bank-collapse/” target=”_blank” rel=”follow”>preventing a bullish correction</a>. Additionally, investors continue to assess the impact of Tuesday’s announcement from the
bank that it has <a href=”https://www.financemagnates.com/institutional-forex/credit-suisse-highlights-material-weakness-in-delayed-annual-report/” target=”_blank” rel=”follow”>found “material weaknesses”</a> in its financial
reporting over the past two years.</p><p>”We
cannot because we would go above 10%. It’s a regulatory issue,” Ammar Al
Khudairy, the Chairman of Saudi National Bank, told Reuters.</p><p>The Saudi
bank became a significant shareholder in Credit Suisse last year when it
purchased a 10% stake by participating in a capital raising round and pledged
to invest up to $1.5 billion in the institution’s growth. </p><p>Apart from
the record low share prices, the rising cost of insuring the company’s bonds
against default seems to be a much more significant issue. According to S&P
Global Market Intelligence data, the five-year credit default swaps widened
from 549 basis points at the last close to 533 basis points.</p><p>Credit Suisse Sparks New
Sell-Off in European and World Bank Stocks</p><p>The latest
news from Saudi National Bank has not only influenced Credit Suisse but has triggered a new wave of unrest in European and global financial markets. Thus,
the rebound from the initial shock caused by the SVB crisis proved short-lived.</p><p>The index
of European bank shares slid by 2.5%, and US stock futures gave up 1% of their
value. The depreciation of bank shares is visible on all major exchanges on the
Old Continent from Warsaw, Frankfurt and Paris to London.</p><p>Amidst
market <a href=”https://www.financemagnates.com/terms/v/volatility/” class=”terms__secondary-term” id=”7fd330d9-8855-4c31-9770-cb52b328c117″ target=”_blank”>volatility</a>, investors gravitate towards safer investments,
resulting in a rise in bond yields and the dollar’s value. The DXY dollar
index, which gauges the strength of the US currency against six major
currencies, rose by 0.8% to 104.5, achieving the largest single-day increase in
a week.</p><p>All signs
suggest that investors are afraid of the Credit Suisse crisis
worsening. While a collapse like that of the much smaller Silicon Valley Bank
(SVB) seems unlikely at this point, the persistent issues plaguing the Swiss
lender do not instill confidence.</p><p>Last week,
Credit Suisse <a href=”https://www.financemagnates.com/institutional-forex/credit-suisse-delays-annual-report-and-cuts-investment-banking-jobs/” target=”_blank” rel=”follow”>delayed the publication of its financial report</a> following the US
SEC call and announced further job cuts, this time in Japanese branches related
to banking investments. After <a href=”https://www.financemagnates.com/institutional-forex/credit-suisse-reports-chf-73-billion-annual-loss-in-2022/” target=”_blank” rel=”follow”>reporting a loss of over CHF 7 billion in 2022</a>,
the institution announced the need for strategic restructuring and a headcount
reduction of up to 9,000 jobs.</p>
This article was written by Damian Chmiel at www.financemagnates.com.
