Credit Suisse’s share price has plunged to a record low after the Saudi National Bank (SNB), the bank’s largest shareholder, announced that it cannot increase its financial support to Credit Suisse due to banking regulations. This news, along with the announcement that the bank was postponing the disclosure of its 2022 results due to problems in the reporting process, caused investors to flee Credit Suisse stocks, resulting in a drop of more than 21% yesterday. The Swiss Exchange (SET) ordered Credit Suisse to suspend trading following the sharp drop in the bank’s share price.
Credit Suisse has been struggling in the wake of a series of regulatory scandals and financial losses. The bank revealed a net loss of CHF 1.4 billion ($1.51 billion) in the fourth quarter of 2022, which was higher than analysts’ expectations of CHF 1.32 billion. This resulted in a full-year loss of CHF 7.3 billion.
In addition to financial losses, Credit Suisse has also been hit by a wave of customer withdrawals, with deposits of more than CHF 110 billion leaving the bank in the fourth quarter of 2022 amid concerns over the bank’s regulatory issues and the risk of prosecution.
The SNB’s decision not to increase its financial support to Credit Suisse is a significant blow to the bank, as it had hoped to receive additional capital to help it weather the storm. However, the SNB stated that it could not increase its holdings in Credit Suisse beyond 10% due to banking regulations.
The news of the SNB’s decision and the postponement of the bank’s 2022 results disclosure has caused significant concern among investors, and many are now questioning the bank’s future prospects. The Swiss Financial Market Supervisory Authority (FINMA) has launched an investigation into Credit Suisse’s risk management and control processes, and the bank has warned that it may face additional regulatory action in the future.
The situation is fluid, and the bank is likely to face further challenges in the weeks and months ahead.