The firm’s president, Axel Lehmann, declined to comment on whether it will need government assistance in the future, noting that the bank has no problems as it has good rates of return on capital.
With the banking industry in the United States currently experiencing financial stress, there may be a trickle down to Europe, where eyes are now on banks like Credit Suisse Group AG (SWX: CSGN). The bank’s shares are experiencing a massive freefall right now, dipping below 27% in what appears to be the second day of losses.
The bank’s problems began when Recorded a material breach in its accounting process as designated by the United States Securities and Exchange Commission (SEC). The regulator’s call notably related to a “technical assessment of previously disclosed revisions to the consolidated statements of cash flows for the years ended December 31, 2020 and 2019, as well as related controls.”
The talks with the SEC led to the delay of the bank’s annual report, which was originally scheduled for Thursday of last week and was published on Tuesday. Late last year, Credit Suisse said it was seeing “significantly higher withdrawals of cash deposits, non-renewal of past-due time deposits, and net asset outflows at levels that substantially exceeded rates incurred in the third quarter of 2022.”
This trend could continue if proper precautions are not taken. The financial landscape, especially for companies operating in the United States, is very volatile right now. The collapse of Silicon Valley Bank (SVB) has put investors and bank users on high alert and at every sign of fragility in a particular financial services provider, the chances of decoupling are very high.
Credit Suisse has been battling scandals, legacy risks and a series of compliance failures that have set it back markedly compared to its peers over the years. With the current outlook, more turbulence is possible for the bank.
Credit Suisse funding of a Saudi partner to halt
As recently revealed, Credit Suisse’s problems are sure to worsen as its main financier, the Saudi National Bank (SNB), has said it will stop funding the company. SNB acquired a 9.9% stake in Credit Suisse last year and has been a major pillar of the company ever since.
“We cannot because we would go above 10%. It is a regulatory issue,” Saudi National Bank President Ammar Al Khudairy told Reuters today. However, he added that the SNB is happy with Credit Suisse’s transformation plan and suggested the bank is unlikely to need extra money.
Credit Suisse is currently at an inflection point and while company chairman Axel Lehmann declined to comment on whether it will need government assistance in the future, he stressed that the bank is not in trouble as it has good rates of return on capital.
“We are regulated, we have strong capital ratios, a very strong balance sheet. We are all hands on deck,” he said in a statement to CNBC’s Hadley Gamble during a panel session in Riyadh today.
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Benjamin Godfrey is a blockchain enthusiast and journalist who enjoys writing about the real-life applications of blockchain technology and innovations to drive mainstream acceptance and global integration of emerging technology. His desire to educate people about cryptocurrencies inspires his contributions to renowned blockchain-based sites and media. Benjamin Godfrey is a lover of sports and agriculture.
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