Credit Suisse’s stock price continued to fall Friday, wiping out the previous session’s gains, as investor’s grow increasingly apprehensive about the bank’s outlook, despite news of a $54 billion lifeline from the Swiss National Bank.
Switzerland’s second-largest bank saw its stock price fall by over 10% as of 13:10 GMT, after two days of volatile swings in which its share price rose by 20% on Thursday, following an almost 25% drop on Wednesday.
The bank’s stock fell following word its biggest investor, the Saudi National Bank (SNB), noted it could not provide the bank with any further assistance, due to legal and regulatory constraints within the Kingdom.
The initial trigger for the turmoil engulfing the bank was the collapse last week of multiple US technology company lenders.
Credit Suisse announced on Thursday it had secured a 50 billion Swiss franc ($53.8 billion) lifeline from the Swiss National Bank, the nation’s central bank, to reassure investors it would have enough liquidity on hand to continue to operate. The bank also announced it had repurchased billions of dollars of its own debt, which would allow it to better manage interest payment expenses and liabilities.
Frederique Carrier, head of investment strategy for RBC Wealth Management, said in an interview with Reuters, “Whether depositors are sufficiently reassured to stem outflows over the next few days is a key question, in our view.”
She added, “While markets are relieved that the Swiss central bank stepped in, sentiment is bound to remain very fragile, particularly as investors will likely worry about the eventual economic impact of aggressive monetary policy tightening by the European Central Bank (ECB).”
Even prior to the collapse of the US banks which triggered the recent crisis of confidence in the banking sector, Credit Suisse had been trying to recover from a string of scandals and losses which had shaken investors and clients. In the fourth quarter, customer outflows amounted to over 110 billion francs.
Last week the Financial Times reported that bankers at Swiss banks have been complaining that the country’s decision to support Western sanctions against Russia over Ukraine has had a negative effect on their banking business. They reported that Bern abandoning its traditional position of neutrality and freezing Russian accounts at the behest of Western powers has scared off clients from nations such as China, who fear their country may fall afoul of the United States government next, and their deposits could be frozen as well.
