- Credit Suisse has sold off by nearly 30% in Wednesday's premarket.
- Chairman of Saudi National Bank said his institution would not bailout Credit Suisse.
- Credit Suisse found issues with several annual financial statements of recent years.
- CS stock dropped below S3 support in premarket.
Credit Suisse (CS) stock has seen its share price dwindle just under 30% on Wednesday morning after the Swiss investment bank's largest shareholder said it was not open to providing further liquidity to the embattled bank. The European banking index fell over 6% on Wednesday due to the news, while US Treasuries and German Bunds saw their yields plummet as investors piled into safe havens. The flight to safety is on this Wednesday, and futures for the top three US stock indices are down between 1.3% and 1.7%.
Credit Suisse stock news: Saudis refuse to save the Suisse
Bloomberg interviewed Saudi National Bank Chairman Ammar Al Khudairy, believing that Credit Suisse's largest investor would move to boost sentiment in the struggling bank. Instead, Al Khudairy said his bank would "absolutely not" provide further funding or equity investment. He said there were a host of reasons for this, although " the simplest reason, which is regulatory and statutory."
This greatly troubled the markets, and NASDAQ futures are currently down 1.4% at the time of writing, while blue chip stocks in the Dow are faring even worse. The cost of insuring Credit Suisse bonds for one year has risen as high as 1,200 basis points, though most credit-default swaps have not reached that level.
The current crisis was made worse after the bank said in its annual report that it found "material weakness" in its fiscal 2021 and fiscal 2022 annual statements. These misstatements had already caused the bank to delay the publishing of its annual report, while it worked with the Securities & Exchange Commission (SEC) to remedy the situation.
"This could result in misstatements of account balances or disclosures that potentially would not be prevented or detected," Credit Suisse said in a statement. The bank added that these weaknesses in its prior reports did not affect the results from 2022 however.
CEO Ulrich Korner has been making the rounds all week presenting the case that Credit Suisse is simply dealing with the difficulties of its corporate transition. Korner was adament that the difficulties faced by Silicon Valley Bank,which collapsed last Friday in the US, were not at all similar to Credit Suisse's current situation.
Credit Suisse stock forecast
Monday had Credit Suisse stock bouncing off the S2 pivot, but now with Wednesday's plummet, CS stock has dropped below the S3 at $1.87. The S4 sits at $1.35, which is the best entry point for knife catchers. More bulls would likely join in if CS shares reversed back above $2.38.
CS daily chart
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.