April 23, 2024

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Credit Suisse hit a record low, its biggest backer saying it couldn’t pay more money

Credit Suisse hit a record low, its biggest backer saying it couldn’t pay more money

ZURICH (Reuters) – Shares in Credit Suisse (CSGN.S) fell on Wednesday, dropping as much as 10.5 percent to a new record high, as the bank’s largest investor said it could provide no more financial assistance to the Swiss bank.

“We can’t because we go beyond 10%. It’s a regulatory issue,” Ammar Al-Khudairi, chairman of the board of directors of the National Bank of Saudi Arabia, said on Wednesday.

The Saudi lender acquired nearly a 10% stake last year after it participated in Credit Suisse’s capital raise and committed an investment of up to CHF1.5 billion ($1.5 billion).

Credit Suisse on Tuesday published its 2022 annual report saying the bank had identified “material weaknesses” in controls over financial reporting and had not yet halted customer outflows.

Switzerland’s second largest bank is seeking to recover from a series of scandals that have undermined investor and customer confidence. Customer outflows in the last quarter rose to more than CHF110 billion ($120 billion).

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Shares last fell 10.2% to 2.01 Swiss francs ($2.19) in Zurich, heading for a seventh consecutive daily decline.

The cost of insuring the company’s bonds against default also rose. Five-year credit default swaps on Credit Suisse debt widened to 533 basis points from 549 basis points at the last close, according to data from S&P Global Market Intelligence.

Broader stock markets fell sharply, reversing earlier gains, as a drop in Credit Suisse shares reignited some jitters among investors about the resilience of the global banking system in the wake of the collapse of Silicon Valley Bank (SIVB.O).

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($1 = 0.9173 Swiss francs)

(Reporting by Noel Ellen) Editing by Amanda Cooper and Elisa Martinuzzi

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