Credit Suisse Group AG shares plunged and the cost of insuring its bonds against default were near a distressed level after the bank’s biggest shareholder ruled out any additional support.
(Bloomberg) — Credit Suisse Group AG shares plunged and the cost of insuring its bonds against default were near a distressed level after the bank’s biggest shareholder ruled out any additional support.
Credit Suisse shares sank 21%, the biggest one-day selloff on record. One-year credit default swaps were indicated at 835.9 basis points on Tuesday’s close of business.
The Euro Stoxx Banks Index declined 7%, reaching the lowest since early January, and BNP Paribas SA sank nearly 10%.
“Markets are very sensitive to the negative news flow after the surprise of seeing a US bank disappear from one day to the other and the contagion that hit other US regional banks,” said Francois Lavier, head of financial debt strategies at Lazard Freres Gestion.
Credit Suisse Top Holder Rules Out Investing More After Drop
“In a context where market sentiment is already weakened, not much is needed to weaken it even further,” Lavier added.
Credit Suisse is in the midst of a complex three-year restructuring in a bid to return the bank to profitability. It was hard hit by the recent wave of bearishness triggered by Silicon Valley Bank’s demise, with its five-year CDS spreads hitting a record. Investors are increasingly worried about the health of banks following the collapse of Silicon Valley Bank.
“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Saudi National Bank Chairman Ammar Al Khudairy said in an interview with Bloomberg TV on Wednesday. That was in response to a question on whether the bank was open to further injections if there was another call for additional liquidity.
Chief Executive Officer Ulrich Koerner said in a Bloomberg Television interview on Tuesday that business momentum improved this quarter and that the bank attracted funds after the collapse of SVB.
–With assistance from Macarena Muñoz and Chiara Remondini.
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