Swiss lender Credit Suisse has plunged into a crisis as its stocks plummeted to a record low on Wednesday. The crash in stocks came soon after the troubled bank's largest investor refused to pump in more capital.
Credit Suisse, Switzerland's second-biggest bank, has been dogged by outflows of client cash since the last quarter of 2022, when more than 110 billion Swiss Francs (or 113 billion Euros) were pulled out.
On Tuesday, the lender said that withdrawals had continued into this month, even after it started a huge campaign to restore the confidence of its clients.
Also read: Credit Suisse shares decline 26%, chairman rules out govt assistance amid contagion fears
Today, the bank lost nearly 25 per cent in market capitalisation after the chief of the Saudi National Bank (SNB), the largest investor in Credit Suisse, said it won't infuse any more capital into the Swiss lender. "The answer is absolutely not for many reasons," Saudi National Bank (SNB) chairman Ammar Al Khudairy said while speaking to Bloomberg.
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Khudairy - who has played key leadership roles in various Saudi financial institutions, including Riyad Bank, United Saudi Bank, and Banque Saudi Fransi - said the SNB currently owns 9.8 per cent of Credit Suisse.
"If we go above 10 per cent, all kinds of new rules kick in whether it be our regulator or the European regulator or the Swiss regulator," Khudairy said, adding that SNB was not inclined to get into a new regulatory regime.
After Khudairy's remarks, Credit Suisse Group AG's chairman Axel Lehmann said state assistance "isn't a topic" for the bank. He also said it would not be accurate to compare Credit Suisse's problems with the recent collapse of Silicon Valley Bank, whose sudden collapse has triggered fears of a bank run in the US.
The investors of Credit Suisse were spooked as the bank in its annual report released on Tuesday disclosed that it found 'material weaknesses' in its financial reporting processes for 2021 and 2022.
The bank's annual report had been delayed following a request from the US market regulator - Securities and Exchange Commission, which had raised questions about the bank's earlier financial statements.
In its report, Credit Suisse admitted the weaknesses and said they were related to the failure to design an effective risk assessment process to identify and analyse the risk of misstatements in its financial statements.
In February this year, Credit Suisse reported its biggest annual loss since the 2008 financial crisis. As of today, the shares of the bank have crashed over 92 per cent from an all-time high and over 76 per cent in the last one year.
(With inputs from Reuters)