Credit Suisse share price: ‘We can’t because we’d go above 10%. It’s a regulatory problem,’ According to Reuters, Saudi National Bank Chairman Ammar Al Khudairy. Credit Suisse Group AG shares fell 24% on Wednesday, the biggest one-day drop on record, after the lender’s largest shareholder, Saudi National Bank, said it could not increase its 10% stake due to regulatory concerns.
“We can’t because we’d go above 10%. “It’s a regulatory issue,” Saudi National Bank Chairman Ammar Al Khudairy told Reuters. However, Khudairy went on to say that the SNB is pleased with Credit Suisse’s transformation strategy and that the bank is unlikely to require additional funding.
Saudi National Bank, which is 37% owned by the kingdom’s sovereign wealth fund, became Credit Suisse’s largest shareholder late last year after purchasing a 9.9% stake in the Swiss lender for 1.4 billion Swiss francs. In just a few months, the stake has lost more than 500 million francs.
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Trading has been halted
The stock exchange operator halted trading in Credit Suisse’s plummeting shares several times as volumes soared and the stock plummeted. By midday London time, the stock had recovered slightly and was down 20.2 percent for the session.
“Credit Suisse’s share price is falling, and government bonds are rallying as a result. Still heavily influenced by perceptions of the health of the banking sector, but this time in Europe, “ING senior rates strategist Antoine Bouvet said.
Credit Suisse is undergoing a complex three-year restructuring in order to return to profitability. It was hard hit by the recent wave of bearishness triggered by the demise of Silicon Valley Bank, with its five-year CDS spreads reaching a new high. Following the failure of Silicon Valley Bank, investors are increasingly concerned about the health of banks.
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Bank stocks in Europe fell
Credit Suisse share price: Since March 8, Europe’s bank index has lost more than 120 billion euros ($127.08 billion). At 1154 GMT, the index was down 6.4 percent. This dragged down European stocks by 2.4%. It is the index’s biggest weekly drop since Russia’s invasion of Ukraine in February.
Credit Suisse headlines have “spooked” markets, according to Richard McGuire, head of rates strategy at Rabobank in London.
“Markets are extremely sensitive to negative news flow following the surprise of a US bank disappearing from one day to the next and the contagion that hit other US regional banks.” “said Francois Lavier, Lazard Freres Gestion’s head of financial debt strategies.
“In a context where market sentiment is already weakened, it doesn’t take much to erode it further.” “Lavier continued.
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Fears of contagion have weighed on European bank stocks
Fears of contagion have weighed on European bank stocks following the failures of tech-focused lender SVB and New York-based Signature Bank last week.
“Markets are raging. We transition from the problems of American banks to those of European banks, beginning with Credit Suisse “Carlo Franchini, director of institutional clients at Banca Ifigest in Milan, agreed.
“This is dragging down Europe’s entire banking sector. The stock’s losses accelerated after the Saudis (commented)… I believe Credit Suisse’s crisis can be resolved, and the bank will not fail “said Franchini.
Swiss bank UBS shares fell 6.8 percent. BNP Paribas and Societe Generale, both French banks, were down more than 11%.
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Banco de Sabadell in Spain was down 9%, Commerzbank in Germany was down nearly 10%, and Deutsche Bank shares were down 8.4%.
“The fact remains that European banks, particularly the larger ones, have much better management of their interest rate risk, which is what caused the three US banks to fail, and they have liquidity,” said Jerome Legras, research head at Axiom Alternative Investments.
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