Credit Suisse shares collapse, with a Saudi investor excluding more money

London (CNN) Shares of Credit Suisse crashed as much as 30% on Wednesday to a new record low after its biggest backer appeared to rule out any additional funding for the bank. The embattled Swiss lender.

Speaking to reporters on the sidelines of a conference in Saudi Arabia, the head of the National Bank of Saudi Arabia said he would not increase his stake in Credit Suisse.

“The answer is not at all, for many reasons. I will mention the simplest reason, which is regulatory and legislative. We now own 9.8% of the bank – if we go beyond 10%, all kinds of new rules apply, whether it is by our organization,” Ammar Al-Khudairi told Bloomberg. Or the European regulator or the Swiss regulator.” “We are not inclined to enter into a new regulatory regime.”

Saudi Arabia’s largest bank invested $1.5 billion in Credit Suisse last fall, becoming the largest shareholder in the process.

Once a major player on Wall Street, Credit Suisse has been subjected to a series of missteps and Compliance failure Over the past few years they have damaged their reputation with clients and investors, and cost many senior executives Careers.

Customers withdrew 123 billion Swiss francs ($133 billion) from Credit Suisse last year — most of it in the fourth quarter — and the bank posted a net annual loss of nearly 7.3 billion Swiss francs ($7.9 billion), its biggest loss since the global financial crisis in 2008. .

In October, the bank embarked on a “radical” restructuring plan that includes cutting 9,000 full-time jobs, breaking up the investment bank and focusing on wealth management.

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Al-Khudairi said he was happy with the restructuring, adding that he did not think the Swiss lender would need additional funds.

Others are not so sure.

Credit Suisse may no longer have enough capital to absorb losses in 2023 because its funding costs have become prohibitive, said Johann Schultz, European banking analyst at Morningstar.

“To stem customer outflows and ease the anxiety of wholesale finance providers, we believe that Credit Suisse needs other rights [share] He commented on Wednesday. “We think the alternative would be a break-up … with the sale of the healthy businesses – the Swiss bank, asset management, wealth management and possibly some parts of the investment banking business – or sold separately listed.”

It is not just a Swiss problem

Shares of the bank last fell 24% in Zurich on Wednesday, and the cost of buying credit default insurance for Credit Suisse hit a new record, according to S&P Global Market Intelligence.

The Financial Times reports that Credit Suisse has appealed to the Swiss National Bank and Swiss regulator Finma to show public support.

Credit Suisse declined to comment. Swiss National Bank Finamah also declined to comment and the European Central Bank said it “cannot comment on individual banks”. The European Central Bank plays an indirect role in regulating Credit Suisse due to the bank’s presence in Eurozone countries such as Germany, Italy and Spain.

Two supervisory sources told Reuters that the European Central Bank had contacted the banks to question them about their exposure to Credit Suisse.

The collapse extended to other European bank stocks, as French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank fell between 8% and 12%. Italian and British banks also fell.

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The markets were already on edge due to the collapse of the Silicon Valley Bank (SVB) last week. And while the problems at Credit Suisse were widely known, with assets of around 530 billion Swiss francs ($573 billion), they represented a much bigger potential headache.

“[Credit Suisse] “Credit Suisse is not just a Swiss problem, it’s a global problem,” writes Andrew Kenningham, chief European economist at Capital Economics.

The blows continue to face Switzerland’s second largest bank. And on Tuesday she confessed.physical weaknessin its financial reports and cancel bonuses for senior executives.

Credit Suisse said in its annual report that it found that “the group’s internal control over financial reporting was ineffective” because it failed to adequately identify potential risks to the financial statements.

The bank is urgently developing a “remedial plan” to strengthen its controls.

Speaking to Bloomberg TV on Tuesday, Credit Suisse CEO Ulrich Korner said the bank saw “physically good inflows” of money on Monday, even as markets were spooked by the collapse of SVB and Signature in the US.

Korner added that outflows from the bank were “significantly moderate” after customers withdrew 111 billion francs ($122 billion) in the three months to December. The bank said in its annual report that outflows did not decline until the end of last year.

Korner said that the collapse of the SVB was “more or less an isolated problem”. He added that Credit Suisse follows “a materially different and higher standard when it comes to capital funding, liquidity and so on”.

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Olesya Dmitrakova and Levi Doherty contributed to this article.

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