Credit Suisse Group AG was plunged into fresh market turmoil after Chief Executive Officer Ulrich Koerner’s attempts to reassure employees and investors backfired, adding to uncertainty surrounding the bank.
While acknowledging that the bank was at a “critical moment,” Koerner pledged to send employees regular updates until the firm announces its new strategic plan on Oct. 27. At the same time, Credit Suisse again sent around talking points to executives dealing with clients who brought up the credit default swap, according to people with knowledge of the matter.
Some clients have used the rise in the CDS this year to ask questions, negotiate prices or use competitors, the people said, asking to remain anonymous discussing confidential conversations.Still, prominent figures took to Twitter over the weekend to dismiss some of the rumors circulating on social media prompted by the widened CDS spread as “scaremongering.
Credit Suisse’s market capitalization has dropped to around 10.4 billion Swiss francs, meaning any share sale would be highly dilutive to longtime holders. The market value was above 30 billion francs as recently as March 2021. Regulators in both the UK and Switzerland, who have been keeping a close eye on Credit Suisse since the multibillion-dollar Archegos Capital loss in 2021, continue to monitor the bank’s stability, according to people with knowledge of the matter.
The stress eased over several months as the German firm settled for a lower figure than many feared, raised about 8 billion euros of new capital and announced a strategy revamp. Still, what the bank called a “vicious circle” of declining revenue and rising funding costs took years to reverse.