With a total of over 50,000 employees, Credit Suisse is one of the world’s largest asset managers.
(Photo: Bloomberg)
Zurich Credit Suisse shares resumed their slide on Friday. The shares of the ailing major Swiss bank fell by 10.6 percent to CHF 1.8070 by noon. The situation remains tense, explained Daniel Bosshard, an analyst at the Luzerner Kantonalbank.
“The basic problem of Credit Suisse remains the lack of customer trust.” The financial market supervisory authority Finma and the Swiss National Bank (SNB) have confirmed that the institute has sufficient capital and liquidity. “But the markets don’t really seem to trust it.”
According to an insider, the bank supervisors of the ECB came to the conclusion at a special meeting that the stability of the sector in the euro zone was not affected after the recent turmoil. In addition, the supervisors were informed that the banks’ exposure to Credit Suisse was immaterial, the insider said.
Credit Suisse shares then accelerated their descent. Meanwhile, European banking and financial stocks were only slightly lower. The European Central Bank (ECB) declined to comment.
With a minus of 27 percent so far, Credit Suisse is heading for the biggest weekly price decline since the 2008 financial crisis. The announcement on Friday that DBRS Morningstar was the first global rating agency to lower Credit Suisse’s rating after the Swiss central bank’s aid caused new uncertainty.
DBRS lowered the major bank’s issuer rating to “BBB”. The agency cited ongoing missteps and compliance violations that weakened the company. DBRS is also concerned that Credit Suisse will be able to “restore stakeholder trust.”
It should now be decisive how the bank’s customers behave. “Whether depositors are sufficiently reassured to stem outflows over the next few days is a key question, in our view,” said Frédérique Carrier, head of investment strategy at RBC Wealth Management.
Investors withdraw money from Credit Suisse funds
It was also announced that private and professional investors withdrew hundreds of millions of dollars from more than 300 Credit Suisse funds managed in the USA and Europe in the first half of the week. From March 13 through March 15, outflows totaled more than $450 million, Morningstar Direct reported on Friday.
Data for after March 15 was not yet available, according to Morningstar. In addition, not all Credit Suisse funds reported daily inflows and outflows.
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With a total of over 50,000 employees, Credit Suisse is one of the world’s largest asset managers. Confidence in the stability of the institute is crucial for business success. After years of failures and scandals, however, this trust has recently eroded. In the fourth quarter alone, investors withdrew over CHF 110 billion.
In the meantime, the outflows have subsided significantly. However, with the uncertainty surrounding Silicon Valley Bank in California, uncertainty spread again. In order to be able to implement possible withdrawal orders from customers, Credit Suisse is now tapping into the SNB funds in tranches. If these measures do not lead to stabilization soon, experts consider state aid or a takeover to be possible next steps.
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