Shares of Credit Suisse fell over 10% in Europe’s morning session following a report in the Financial Times that the Swiss bank’s leaders are in negotiations with its key investors to reassure them amid mounting worries about the lender’s financial health.
One official participating in the negotiations told the FT that bank teams were actively communicating with its major clients and counterparties over the weekend, and that they were receiving “support signals” from top investors.
Spreads of the bank’s credit default swaps (CDS), which protect investors against financial risks such as default, increased dramatically on Friday. They followed allegations that the Swiss lender is seeking to raise money, citing a message from CEO Ulrich Koerner.
The stock is almost 60% down year-to-date.
The FT says that Credit Suisse was trying to stop this move because its share price was at a record low and it had to pay more to borrow money after its ratings were cut.
Credit Suisse is making a strategy review
According to Reuters, the bank is undergoing a review of its strategy that includes prospective divestitures and asset sales.
Reuters reported that Credit Suisse has been in negotiations with investors to raise capital with different eventualities in mind, including the possibility that the bank may “essentially” abandon the U.S. market, citing sources familiar with the situation.
JP Morgan analysts stated in a research note that Credit Suisse’s capital and liquidity were “strong” based on its financials at the end of the second quarter.
Given the bank’s objective to maintain its CET1 capital ratio at 13-14% in the near future, the ratio at the end of the second quarter is well within this range, and the liquidity coverage ratio is substantially above requirements, analysts said.
At the conclusion of the second quarter, Credit Suisse reported total assets of 727 billion Swiss francs ($735,68 billion), of which 159 billion francs were cash and due from banks and 101 billion were trading assets.
