Senior Credit Suisse executives spent the weekend reassuring large clients, counterparties and investors about the liquidity and capital positions of Swiss banks in response to growing concerns about the financial strength of Swiss banks. I was.
Management made the call after spreads on bank credit default swaps, which provide protection against corporate defaults, rose sharply on Friday.
A Credit Suisse executive who participated in the discussion said, “The team has been actively engaging with key customers and counterparties this weekend. We have also received messages of support from top investors.”
Executives have denied recent press reports that Credit Suisse has formally approached investors about the possibility of raising additional funding, saying the bank has seen share prices at record lows and reduced borrowing costs due to rating downgrades. He claimed that he was trying to avoid such a move by rising.
After Credit Suisse’s share price plunged more than 25% last month to below CHF4, CEO Ulrich Körner sent a company-wide memo on Friday to try to reassure employees about the bank’s capital position and liquidity. did.
However, shares came under pressure in early trading on Monday, falling 9% to CHF3.61 in Zurich.
Körner’s move also follows a sharp rise in credit default swaps, a measure of investor sentiment towards risk, rising more than 50 basis points over the past two weeks, reaching 250bp on Friday.
In a subsequent briefing note sent to Credit Suisse executives on Sunday on topics to discuss with customers, staff said following rumors on social media about the bank’s financial health: Be our capital and financial strength.
“Our position on this point is clear. Credit Suisse has a strong capital and liquidity position and balance sheet. Price movements do not change this fact.”
A company executive contacted by Credit Suisse said the lender was “the worst big bank in Europe” but said it was not in imminent danger.
“I haven’t had a meeting on this subject,” he said. “I don’t think it’s a crisis.” The bank’s fall in share price reflects serious problems and a lack of clear solutions, executives said.
Local Swiss banks are highly profitable and global private banks still have strong brands, but potential investors and buyers fear the investment banking sector may have been hiding high debt. I am concerned that there is
Körner and the bank’s board of directors, chaired by former UBS executive Axel Lehmann, are expected to present their third-quarter results on October 27, along with plans to revamp the business to address investor concerns. .
Analysts at Deutsche Bank estimated last month that the restructuring would leave a CHF4 billion hole in Credit Suisse’s capital position.
“We plan to sell and sell assets so that we can fund this very strong pivot that we are trying to achieve towards a stable business,” said a senior bank executive involved in the investor call. I was.
Credit Suisse declined to comment.
Corner, who previously ran Credit Suisse’s asset management business, took over as chief executive over the summer with a brief explanation to downsize the group’s investment bank and cut costs.
The board’s latest plan is to split the investment bank into three parts and revive the “bad banks,” which hold risky assets and business units slated for disposal, the Financial Times reports.
“There is no doubt that between now and the end of October there will be more turmoil in the markets and in the press,” Kellner said Friday. only.”
Uncertainty about the bank’s future has already led to the departure of many executives. Jens Welter, who was co-head of Global Banking, is the latest high-profile North Korean defector to agree to join Citigroup.
Additional reporting by Brooke Masters, New York