Senior Credit Suisse executives over the weekend reassured major clients, counterparties and investors about the Swiss bank’s liquidity and capital position.
After the spread in the bank, executives hit the phones Credit default swapsA company offering security against default on debt rose sharply on Friday, indicating investor concerns about its financial health.
“This weekend the teams are actively engaging with our best customers and counterparties,” said A Swiss debt Administrator involved in discussions. “We also receive inbound calls with messages of support from our top investors.”
The administrator recently refused Journal articles Credit Suisse has approached investors formally to raise more capital, stressing that the bank is trying to avoid a downgrade due to its record low share price and high borrowing costs.
Credit Suisse’s share price has seen its share price fall more than 25 percent to below SFr4 in the past month, with Chief Executive Ulrich Körner sending out a company-wide memo on Friday reassuring staff about the bank’s capital position and liquidity.
But shares were under pressure in early trade on Monday, falling 9 percent to SFr3.61 in Zurich.
Körner’s move followed a sharp rise in credit default changes, a measure of investor sentiment toward risk, which rose more than 50 basis points in the past two weeks to hit 250bp on Friday.
In a briefing note on topics of discussion with clients sent to Credit Suisse executives on Sunday, following rumors about the bank’s financials on social media, employees were told: “Many stakeholders continue to be concerned, including media speculation. Our capital and financial strength.
“Our position on this matter is clear. Credit Suisse has a strong capital and liquidity position and balance sheet. Share price developments will not change this fact.
A top executive at one firm contacted by Credit Suisse said the lender was “the worst big bank in Europe” in his view, but that it was not in immediate danger.
“We don’t hold meetings on this topic,” he said. “I don’t think it’s a crisis.” The bank’s plunging share price reflects its deep woes and the lack of an obvious solution, the executive said.
While the local Swiss bank is more profitable and the global private bank still has a strong brand, investors and buyers worry that the investment banking group may be hiding expensive liabilities.
Körner and the bank’s board, led by fellow former UBS executive Axel Lehmann, are set to present a plan to overhaul the business to address investor concerns with its third-quarter results on October 27.
Analysts at Deutsche Bank last month estimated the restructuring would leave a SFr4bn hole in Credit Suisse’s capital position.
“We will be doing asset sales and divestitures to fund this strong core that we intend to achieve towards a sustainable business,” said a senior bank executive involved in the investor calls.
Credit Suisse declined to comment.
Koerner, who previously ran Credit Suisse’s asset management business, was appointed chief executive in the summer in a brief move to pare back the group’s investment bank and cut costs – which could lead to thousands of job cuts.
Latest Scheme of the Board Separated investment banking The Financial Times reported that the “bad bank” pen, reserved for the disposal of third-party and high-risk assets and business units, should be revived.
“No doubt there will be a lot of noise in the markets and in the press between now and the end of October,” Koerner wrote on Friday. “All I can tell you is, be disciplined and always be close to your customers and colleagues.”
Uncertainty about the bank’s future has already led to the departure of several executives. The most recent was Jens Welter, who was co-chairman of the global bank A high-profile failureAgreed to join Citigroup.
Additional reporting by Brooke Masters in New York