The Chairman of the Board of Directors of the second largest Swiss bank is under investigation by the Swiss authorities.
Credit Suisse is definitely sinking into crisis.
The emergency plan, launched in October, already seems distant, since the bank’s difficulties do not seem to want to disappear.
It’s the opposite. You only have to look at the stock market to understand that the road to redemption is and will be long, very long.
swiss credit (CSGKF) The shares fell 4% in the February 21 trading session to 2.66 Swiss francs, a closing low since at least 1985, according to FactSet. Share prices even fell to 2.62 Swiss francs in the session.
At present, the market value of the bank, once a European financial flagship, is less than that of Coinbase. (CURRENCY) – Get a free reportcryptocurrency exchange. Credit Suisse has a market capitalization of $11.5 billion against a market value of $16.3 billion for the cryptocurrency platform, founded in 2012 to disrupt the financial services industry, using Blockchain technology. Credit Suisse was founded in 1856.
offside
Even at the height of the 2008 financial crisis, Credit Suisse shares did not trade at these prices.
If the stock market crash stems from numerous scandals and doubts about the company’s resilience, the February 21 meltdown stems from a report that the Swiss financial regulator (FINMA) is reviewing statements made by Axel Lehmann, chairman of the Board of Directors, last fall.
At the time, Credit Suisse was facing a massive withdrawal of funds from its wealthy clients of the Wealth Management division, which “New Credit Suisse” focuses on. These clients were concerned about the financial health of the group around which there was much speculation and rumours.
These exits raised the question of the bank’s future profitability, because if Credit Suisse doesn’t have enough assets to manage, its rates will undoubtedly decline.
To reassure its clients and the markets, the bank had attempted an exercise in transparency by announcing on November 23 that its clients had withdrawn around $88 billion between October 1 and November 11.
A few days later, on December 1, Lehmann told a conference that customer departures were not continuing. That day, he told the Financial Times that after strong outflows in October, outflows had “fully stabilized” and “partially reversed.”
The next day, he told Bloomberg Television that the outings have “basically stopped.” That day, December 2, the shares rose 9.3%.
The purpose of these statements was to signal to investors and the markets that the worst may be over while things stabilized. Except, when Credit Suisse announced its full-year results and fourth-quarter 2022 results, the bank reported 110.5 billion Swiss francs ($119.65 billion) in customer withdrawals for the last three months of the year. This suggests that customer withdrawals were continuing at the time of Lehmann’s statements.
What did Lehmann know?
“As previously disclosed, Credit Suisse experienced deposit and net asset outflows in 4Q22 at levels that substantially exceeded rates incurred in 3Q22,” the bank said in its quarterly earnings. “Approximately two-thirds of the net asset outflows in the quarter were concentrated in October 2022 and subsided substantially over the remainder of the quarter.”
He also said the departures “had not been reversed.”
According ReutersThe Swiss financial regulator “is trying to establish the extent to which Lehmann and other Credit Suisse representatives knew that clients were still withdrawing funds when they said in media interviews that the outflows had stopped.”
Regulators want to determine whether Lehmann misled investors. Basically, did you know that the withdrawals were going on at the time of his statements? Was he informed by other executives?
Neither Credit Suisse nor FINMA immediately responded to requests for comment.
The Swiss banking regulator’s investigation goes down very badly for the bank as it tries to convince the markets it can execute its last-chance plan. At best, it’s a distraction the business doesn’t need when it has to focus all its resources on recovery.