Credit Suisse Group AG yesterday hit a fresh record low after attempts to reassure markets on its financial stability only added to the sense of turmoil surrounding the troubled Swiss bank.
Its shares dropped as much as 12 percent in Zurich trading to 3.52 Swiss francs. The bank has lost about 60 percent of its market value just this year alone and is on track for the biggest ever annual drop in its history.
Credit Suisse chief executive officer Ulrich Koerner had sought to calm employees and the markets over the weekend after the stock touched a record low and credit default swaps climbed last week.
Photo: Reuters
While touting the bank’s capital levels and liquidity, he acknowledged that the firm was facing a “critical moment” as it worked toward its latest overhaul plans.
He also told employees that he would be sending them a regular update until the firm announces the new strategic plan on Oct. 27 because of the speculation surrounding the lender.
At the same time, Credit Suisse again sent around talking points to executives dealing with clients who brought up the credit default swaps, people with knowledge of the matter said.
The cost of insuring the firm’s bonds against default climbed about 15 percent last week to levels not seen since 2009. Some clients have used the rise in the bank’s credit default swaps this year to ask questions, negotiate prices or use competitors, the people said, asking to remain anonymous discussing confidential conversations.
Credit Suisse declined to comment via a company spokesman.
Koerner, named chief executive in late July, has had to deal with market speculation, banker exits and capital doubts as he seeks to set a path forward.
The lender is finalizing plans that would likely see sweeping changes to its investment bank and might include cutting thousands of jobs over a number of years, Bloomberg has reported.
Credit Suisse’s market capitalization has dropped to about SF9.5 billion (US$9.6 billion), meaning any share sale would be highly dilutive to longtime holders. The market value was above SF30 billion as recently as March last year.
Bank executives have said that the firm’s 13.5 percent CET1 capital ratio on June 30 was in the middle of the planned range of 13 to 14 percent for this year.
Last year’s annual report said the bank’s international regulatory minimum ratio was 8 percent, while Swiss authorities required a higher level of about 10 percent.
The five-year credit default swaps price of about 250 basis points is up from about 55 basis points at the start of the year and is near their highest on record. While those levels are still far from distressed and are part of a broad market sell-off, they signify deteriorating perceptions of creditworthiness for the scandal-hit bank.
Credit Suisse last week said that it is working on possible asset and business sales as part of its strategic plan which is to be unveiled at the end of this month. The bank is exploring deals to sell its securitized products trading unit, is weighing the sale of its Latin American wealth management operations excluding Brazil, and is considering reviving the First Boston brand name, Bloomberg has reported.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
RSS