Credit Suisse turmoil deepens with record stock, CDS levels
BNN Bloomberg
Credit Suisse Group AG’s gauge of credit risk rose to a record high while its stock hit a fresh low, adding to the turmoil after the bank’s attempts to reassure markets on its financial stability backfired.
The five-year credit default swaps price of about 293 basis points is up from about 55 basis points at the start of the year and at the highest ever, according to ICE Data Services. At the same time, the shares dropped as much as 12 per cent in Zurich on Monday and have lost about 60 per cent just this year alone, on track for the biggest annual drop in Credit Suisse’s history.
Chief Executive Officer Ulrich Koerner had sought to calm employees and the markets over the weekend only to see his carefully-worded memo have the opposite effect. While touting the bank’s capital levels and liquidity, he acknowledged that the firm was facing a “critical moment” as it worked towards its latest overhaul.
He also told employees that he will be sending them a regular update until the firm announces the 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 swaps, according to people with knowledge of the matter.
