Credit Suisse sheds another 10% as traders digest emergency liquidity

credit Suisse Shares fell 10% in morning trading after Friday rising compared to the previous season as the embroiled lender said it would Borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.

This week’s intervention by Swiss authorities, which also confirmed that Credit Suisse met capital and liquidity requirements imposed on “systemically important banks,” prompted shares to jump more than 18% on Thursday. closed at an all-time low on Wednesday, Credit Suisse also offered to buy back approximately 3 billion francs worth of debt related to 10 US dollar-denominated senior debt securities and four euro-denominated senior debt securities.

Wednesday’s low fell after top investor Saudi National Bank disclosed It will not provide more cash to the bank due to regulatory requirements, a cycle of decline in Credit Suisse’s share price that began with the delay of its annual results financial reporting concerns,

The bank is undergoing a massive strategic overhaul with the aim of restoring stability and profitability after a Litany of pitfalls and scandals, The restructuring included a spin-off of the investment bank to form US-based CS First Boston, a drastic reduction in exposure to risk-weighted assets, and a $4.2 billion capital raise by a 9.9% stake acquired by Saudi National. Edge.

However, capital markets and stakeholders appear unconvinced. The share price has declined sharply over the past year and Credit Suisse has seen huge outflows in assets under management, losing around 38% of its deposits in the fourth quarter of 2022. credit default swapswhich insures bondholders against a defaulting company, hit a record high this week.

As per the CDS rate, the bank’s default risk has risen to crisis levels, with the 1-year CDS rate rising nearly 33 percentage points to 38.4% on Wednesday, before settling at 34.2% on Thursday.

Charles-Henri Monchou, chief investment officer at Sijs Bank, said Credit Suisse needed to step up to restore investor confidence.

“This support from the SNB and statements from regulators indicate that Credit Suisse will continue in its current form,” he said in a note on Thursday.

“However, these measures are not enough to get Credit Suisse out of trouble entirely; it will take time to restore market confidence through a complete exit from the investment bank, a full guarantee on all deposits by the SNB, and an injection of equity capital.” It’s about. Give Credit Suisse time to restructure.”