The financial market is in the midst of a banking crisis. In the U.S., three banks have collapsed within a short period, and now, it seems like trouble is brewing in Europe as well. Credit Suisse shares hit a new all-time low on Wednesday, March 15, after its largest shareholder, the Saudi National Bank, refused to provide the institution with additional financial assistance.
I don’t think Credit Suisse will need ‘extra’ money: SNB executive
Saudi National Bank’s chairman, Ammar Al Khudairy, labeled Credit Suisse to be an opportunistic investment. In fact, he said that the value realization of that investment will unfold as the Swiss bank demonstrates that they are doing the turnaround. In an interview with Reuters, he said,
“We are happy with the plan, the transformation plan that they have put forward. It is a very strong bank.”
Talking about the same on the sidelines of a conference in Riyadh, Al Khudairy further went on to say,
“I don’t think they will need extra money; if you look at their ratios, they’re fine. And they operate under a strong regulatory regime in Switzerland and in other countries.”
The bank executive reportedly added that the SNB’s investment objective is not dependent on time, and the Saudi bank will exit when the proper value to the shares is acquired. Notably, SNB acquired a stake of 9.9% in October last year by taking part in Credit Suisse’s capital fund-raising. It committed to investing up to 1.5 billion Swiss francs ($1.5 billion).
As mentioned earlier, the shares of the Swiss lender dropped to a new record low. Post registering a 21% drop on the daily, CSGN was trading at 1.768 CHF at press time.
Alongside, it is worth noting that the lender’s Credit Default Swap curve is inverted at the moment, indicating distress. In fact, Credit Suisse’s CDS is currently 18 times UBS and 9 times Deutsche Bank’s.