Short sellers betting against Credit Suisse Group AG stood to reap a substantial profit on Wednesday as the stock plunged to a record low.
(Bloomberg) — Short sellers betting against Credit Suisse Group AG stood to reap a substantial profit on Wednesday as the stock plunged to a record low.
The Swiss bank’s selloff created about $111 million in paper gains for those who sold borrowed shares, wagering they’d decline, according to S3 Partners data. That brings the prospective profits for such bets against the company’s US- and Swiss-traded shares to about $163 million this year, said Ihor Dusaniwsky, S3’s head of predictive analytics.
Credit Suisse’s share price tumbled in Zurich after the chair of the company’s biggest shareholder, Saudi National Bank, said it wasn’t open to injecting further cash into the bank, fueling worries about the strength of global lenders after the swift collapse of three US banks. The comments came after Credit Suisse Chief Executive Officer Ulrich Koerner had sought to bolster investor confidence by pointing to signs of improvement in its business.
In a show of support on Wednesday, the Swiss National Bank and a regulator said the firm will get a liquidity backstop if needed. Following that announcement, the bank’s American Depositary Receipts pared their drop, which had earlier reached 30%, to close down 14%.
The lender’s tumble fueled a broader slide in global stocks as investors bought havens like US Treasuries. The S&P 500 fell 0.7%, and the KBW Bank Index sank to the lowest level since November 2020.
–With assistance from Thyagaraju Adinarayan.
(Updates prices, adds liquidity backstop information)
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