The bitter news sent Credit Suisse shares down 10 percent to a new all-time low on the Zurich stock exchange.
According to Ammar Al Khudairy, there are obvious reasons, including regulatory ones.
Outflows of deposits
Alongside the drop, the price to insure against Credit Suisse canceling near-term payments continues to rise in the so-called CDS market – a sign that financiers and lenders are worried. As a result, the price of the CDS contracts that protect against a Credit Suisse collapse is nine times higher than Deutsche Bank’s and 18 times higher than domestic competitor UBS.
Credit Suisse – grappling with large outflows of deposits following rumors of financial trouble spread on social media – is in the midst of a major restructuring, with a plan to spin off its investment bank and retain asset management.
Owns 9.9 percent of Credit Suisse
The bank’s CEO Ulrich Körner said as recently as Tuesday that Credit Suisse’s financial position was stable, including access to liquidity.
On Wednesday, chairman Axel Lehmann followed up by declaring that there is no reason to discuss support measures for Credit Suisse.
Saudi National Bank bought into Credit Suisse last year and today owns 9.9 percent of the shares in the major Swiss bank. Saudi National Bank is in turn controlled by the Kingdom of Saudi Arabia’s State Pension Trustee, which holds 37 percent of the shares in the bank.