Credit Suisse Shares Hit All-Time Low Following Silicon Valley Bank Collapse

by Damian Chmiel
  • Big banks' shares are falling after the SVB collapse, confirmed on 10 March 2023.
  • Swiss lender's stock price touched a new record low on Monday morning.
Credit Suisse
Credit Suisse

Shares of the troubled banking giant Credit Suisse reached new record lows on Monday, falling more than 10% in the early morning trading on the Swiss stock exchange, SIX. Banks worldwide, including Europe, have been losing ground since Friday following news that technology company-backed Silicon Valley Bank (SVB) is declaring bankruptcy .

This has raised fears that it could be a new 'black swan' for the financial market and bring a scenario similar to the collapse of Lehman Brothers in 2008.

SVB Crisis Pushes Credit Suisse to Record Lows

Shares in Credit Suisse (SIX: CSGN) started this week at EUR 2.5 but are down around 11% since the start of the session and currently cost EUR 2.21, which is an all-time low. The lender has been losing around 20% since the beginning of the year after its shares lost almost 70% in 2022.

Although the most recent slump is directly connected with the SVB crisis, previous declines are largely to blame for the bank's internal problems, shrinking revenues and regulatory and legal controversies.

Credit Suisse Shares Test New All-Time Low. Source: Tradingview.com
Credit Suisse Shares Test New All-Time Low. Source: Tradingview.com

The black clouds have been hanging over Swiss banking for a more extended period. Last week, the company announced postponing the annual report following the US Securities and Exchange Commission (SEC ) call. In addition, the investment banking team in Japan has been significantly reduced.

As per reports in the media, Credit Suisse was compelled to postpone the release of its annual report as it received a subpoena from the SEC in the prior evening concerning cash flow statements that go back three years.

Credit Suisse Reported CHF 7.3 Billion in Annual Losses

The Swiss lender reported massive annual losses that missed analyst expectations a month ago. According to the financial statement, Credit Suisse lost CHF 7.3 billion in 2022 compared to CHF 6.53 forecasted by industry experts. The fourth quarter results fell short of projections and were a nail in the lender's coffin. The net loss amounted to CHF 1.4 billion, which was CHF 800 million higher than was forecasted.

In the third quarter of 2022, the bank disclosed a larger loss of CHF 3.8 billion and acknowledged the necessity for "radical restructuring." This included plans to generate $4 billion in fresh capital, terminate 9,000 jobs, and establish CS First Boston as an independent investment entity in the United States. Credit Suisse commenced job cuts in January, beginning with European investment bankers.

Currently, Credit Suisse is facing the most significant reputation crisis in its 166-year history. A string of recent scandals, such as the $5.5 billion loss in the Archegos collapse and the imposed settlements of $495 million in the US and $234 million in France, have considerably tarnished its image.

Although the CS Management Board wanted to distance itself from further scandals, the Swiss Financial Market Supervisory Authority, FINMA, recently concluded enforcement proceedings regarding Credit Suisse's business relationship with financier Lex Greensill and his companies. The financial watchdog states that the lender "seriously breached" supervision responsibilities.

Large Banks Lose Together with Credit Suisse

Credit Suisse's declines at the start of the week are not alone. The Dow Jones U.S. Banks Index, which measures the health of the largest banks that make up the benchmark, saw steep declines and now stands at 432.98, which is its lowest level since October.

Dow Jones U.S. Banks Index. Source: CNBC.com
Dow Jones U.S. Banks Index. Source: CNBC.com

Goldman Sachs shares lost 4.2% on Friday and closed at $327.67, which is the lowest level in five months. Ahead of Monday's session opening on Wall Street, the shares are losing 1.78% and falling in pre-trading to $321.85. Investors fear that the collapse of SBV will trigger a wave of bank failures.

Furthermore, SVB's collapse triggered increased volatility in cryptocurrencies and traditional currencies. Bitcoin (BTC) was briefly testing levels below the psychological threshold of $20,000. At the same time, the dollar index rebounded from a three-month high amid renewed concerns that the US Federal Reserve will abandon further interest rate increases.

Shares of the troubled banking giant Credit Suisse reached new record lows on Monday, falling more than 10% in the early morning trading on the Swiss stock exchange, SIX. Banks worldwide, including Europe, have been losing ground since Friday following news that technology company-backed Silicon Valley Bank (SVB) is declaring bankruptcy .

This has raised fears that it could be a new 'black swan' for the financial market and bring a scenario similar to the collapse of Lehman Brothers in 2008.

SVB Crisis Pushes Credit Suisse to Record Lows

Shares in Credit Suisse (SIX: CSGN) started this week at EUR 2.5 but are down around 11% since the start of the session and currently cost EUR 2.21, which is an all-time low. The lender has been losing around 20% since the beginning of the year after its shares lost almost 70% in 2022.

Although the most recent slump is directly connected with the SVB crisis, previous declines are largely to blame for the bank's internal problems, shrinking revenues and regulatory and legal controversies.

Credit Suisse Shares Test New All-Time Low. Source: Tradingview.com
Credit Suisse Shares Test New All-Time Low. Source: Tradingview.com

The black clouds have been hanging over Swiss banking for a more extended period. Last week, the company announced postponing the annual report following the US Securities and Exchange Commission (SEC ) call. In addition, the investment banking team in Japan has been significantly reduced.

As per reports in the media, Credit Suisse was compelled to postpone the release of its annual report as it received a subpoena from the SEC in the prior evening concerning cash flow statements that go back three years.

Credit Suisse Reported CHF 7.3 Billion in Annual Losses

The Swiss lender reported massive annual losses that missed analyst expectations a month ago. According to the financial statement, Credit Suisse lost CHF 7.3 billion in 2022 compared to CHF 6.53 forecasted by industry experts. The fourth quarter results fell short of projections and were a nail in the lender's coffin. The net loss amounted to CHF 1.4 billion, which was CHF 800 million higher than was forecasted.

In the third quarter of 2022, the bank disclosed a larger loss of CHF 3.8 billion and acknowledged the necessity for "radical restructuring." This included plans to generate $4 billion in fresh capital, terminate 9,000 jobs, and establish CS First Boston as an independent investment entity in the United States. Credit Suisse commenced job cuts in January, beginning with European investment bankers.

Currently, Credit Suisse is facing the most significant reputation crisis in its 166-year history. A string of recent scandals, such as the $5.5 billion loss in the Archegos collapse and the imposed settlements of $495 million in the US and $234 million in France, have considerably tarnished its image.

Although the CS Management Board wanted to distance itself from further scandals, the Swiss Financial Market Supervisory Authority, FINMA, recently concluded enforcement proceedings regarding Credit Suisse's business relationship with financier Lex Greensill and his companies. The financial watchdog states that the lender "seriously breached" supervision responsibilities.

Large Banks Lose Together with Credit Suisse

Credit Suisse's declines at the start of the week are not alone. The Dow Jones U.S. Banks Index, which measures the health of the largest banks that make up the benchmark, saw steep declines and now stands at 432.98, which is its lowest level since October.

Dow Jones U.S. Banks Index. Source: CNBC.com
Dow Jones U.S. Banks Index. Source: CNBC.com

Goldman Sachs shares lost 4.2% on Friday and closed at $327.67, which is the lowest level in five months. Ahead of Monday's session opening on Wall Street, the shares are losing 1.78% and falling in pre-trading to $321.85. Investors fear that the collapse of SBV will trigger a wave of bank failures.

Furthermore, SVB's collapse triggered increased volatility in cryptocurrencies and traditional currencies. Bitcoin (BTC) was briefly testing levels below the psychological threshold of $20,000. At the same time, the dollar index rebounded from a three-month high amid renewed concerns that the US Federal Reserve will abandon further interest rate increases.

About the Author: Damian Chmiel
Damian Chmiel
  • 1460 Articles
  • 29 Followers
About the Author: Damian Chmiel
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
  • 1460 Articles
  • 29 Followers

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