Credit Suisse shares again suffer another day of extreme volatility. After a quiet opening, the Swiss bank’s titles have fallen more than 12% on the Zurich stock market, even after receiving the support of the Swiss central bank (SNB). The markets seem to question the plan of the Bank of Switzerland and Credit Suisse itself: the 50,000 million could be ‘bread for today and hunger for tomorrow’.
The financial agency Bloomberg hit the nail on the head with information published this Friday: “Credit Suisse already has the liquidity, now what they have to do is win back the customers.”
The Swiss bank has obtained 50,000 million euros in a line of credit that is backed by collateral, that is, Credit Suisse has had to deliver part of its assets to lend it that money that it will have to return at some point. If the liquidity crisis and the flight of deposits and equity has not ended after the massive loan of the SNB, Credit Suisse will continue to have the same problems in the future.
Today, the situation does not seem better, rather the opposite. The price of its shares falls again notably below the two francs although, for now, it has not pierced the historical lows seen on Wednesday. The European stock markets suffer from this widespread risk aversion and suffer declines of more than 1%.
There are many factors behind the distrust of clients and investors in the Swiss entity, but today one of the catalysts is the new capital outflows that it has suffered. This is just the last straw on a camel that was already close to overflowing after years of scandals and massive money losses (Credit Suisse has lost money in 2021 and 2022).
The funds lose 200 million
The data in question that has unleashed sales on the stock market this Friday has been that of money outflows from your funds: Credit Suisse reported net outflows of more than $200 million from its managed funds in the United States and Europe after March 13, it disclosed Friday Morning Star Direct.
Before March 13 (when the turmoil broke out after the fall of Silicon Valley Bank in the US) the more than 300 funds managed by the Swiss bank had enjoyed an estimated net inflow of $4 million.
However, from March 14 to now the total net amount of money withdrawn and flowing into these funds was negative by $205 million, according to the data provider. Data after March 15 has not yet been collected and not all Credit Suisse funds report daily, Morningstar says. Despite these drastic movements, the European Central Bank has concluded this Friday that the situation is not dangerous for European banks. The exposure to Credit Suisse of European banks is “immaterial”.
work on recovery
“We want to recover everything we lost,” Koerner said at an investor conference on Tuesday. “And once we’re there, we’ll grow the business again.”
The bank has always said it has sufficient liquidity, a position it has achieved after years of retaining profits. However, since Bloomberg They assure that it is still not clear what are the general flows that the entity has in real time or if the support of the SNB is helping to attract customers again. The latest data continues to speak of flight of deposits and customers.
bank calls
Credit Suisse bankers are calling clients to reassure them, prepared with talking points sent in by executives or announcements at town halls. The bank is offering significantly higher interest rates on its deposits than its rivals to recover funds, according to data compiled by Bloomberg earlier this month.
“In our conversations with customers over the past few weeks, we have experienced strong support for the bank and our employees,” the bank said in a statement. “We are completely focused on providing our clients with advice and solutions.”
But the truth is that the latest data reveals that some very high net worth families have accelerated their departure from the Swiss bank this week, at least in Asia. Bloomberg he has had access to this information through three large single family offices, which collectively manage billions, and multiple private bankers based in Hong Kong and Singapore.
For all these reasons, the market is increasingly doubting that the liquidity offered by the SNB is going to be the solution to Credit Suisse’s problems. The liquidity will help sustain the bank and give time for solutions to be found, but ingenious solutions have to come from Credit Suisse managers, who are the ones who must refloat the bank.
