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Credit Suisse Approaches Swiss National Bank As Its Stock Drops 30%

Credit Suisse
SANKT MORITZ, SWITZERLAND - AUGUST 16, 2018: Credit Suisse, swiss bank sign on window in Sankt Moritz, Switzerland

Credit Suisse Group AG (NYSE: CS) is once again in hot waters as its top shareholder has ruled out more funding. The Switzerland-based global investment giant received SFr 4 billion in funding just a few months ago. Today’s drop has reduced the swiss lender’s market cap to only SFr 7 billion.

On Wednesday, Credit Suisse opened 30% lower as the bank was denied any further funding from Saudi National Bank (SNB). The Saudi counterpart acquired a 10% stake in Credit Suisse last year. At press time, Credit Suisse stock is trading at $2.02, which is still 20% below its yesterday’s closing price.

Credit Suisse Knocks On The Door Of Suisse Central Bank

After getting ruled out for any further funding by its top investor, Credit Suisse has approached the Swiss National Bank. According to a recent report from Financial Times, the swiss lender has requested the central bank for a ‘public show of support’. A similar request has also been made to the Swiss regulator Finma.

The massive price decline in Credit Suisse stock has also brought it under the monitoring of regulators once again. Troubles for one of the biggest global lenders come at a time when global banks are already dealing with a high degree of uncertainty. The shares of top UK banks kept tanking on Wednesday as the banking fears intensified.

Swiss National Bank Is Likely To Intervene

Many analysts are opining that the Swiss National Bank can’t let Credit Suisse fall as it will be detrimental to the country’s economy. Furthermore, a lack of assurance from the country’s central bank might also hurt Switzerland’s reputation as a global financial centre.

Credit Suisse Stock Chart
Credit Suisse (NYSE: CS) Chart

Therefore, it appears to be only a matter of time before the Swiss National Bank gives a lifeline to the troubled lender. Both SNB and Finma haven’t shared their view on the situation yet.

According to reports, ECB has already evaluated the prospects of issuing a public statement on the matter but decided against it. Amid growing concerns about the future of Credit Suisse, the European Central Bank has asked the banks in its jurisdiction to evaluate their exposures.