Credit Suisse at a crossroads as stocks slide again

1 year ago 55

ZURICH - Credit Suisse shares fell again on Friday despite being bolstered by the Swiss central bank as investors worry about which road the embattled lender will take to try and restore confidence.

Yet more drastic restructuring, closing its investment banking arm, or even a takeover by a rival were being mooted by analysts studying Switzerland’s second-biggest bank, one of 30 deemed of global importance to the international banking system.

Amid fears of contagion after the collapse of two banks in the United States, on Wednesday Credit Suisse’s biggest shareholder said it would “absolutely not” up its stake in the bank for regulatory reasons.

That triggered panic in the markets and the bank’s shares plunged more than 30 per cent during the day’s trading to a new record low of 1.55 Swiss francs a share.

The Swiss National Bank came to the rescue in a bid to reassure the markets, with Credit Suisse announcing it would borrow 50 billion francs (S$70 billion) from the SNB to reinforce the group.

After recovering some ground on Thursday, Credit Suisse shares closed down 8 per cent on Friday at 1.86 Swiss francs each as the Zurich-based lender struggled to regain the confidence of investors.

Highly unlikely bankruptcy

The central bank lifeline raises questions about whether an orderly bankruptcy could happen, in which regulators would take over Credit Suisse and take charge of ...

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