Credit Suisse shares surged 40 percent on March 16, the most on record, after the Swiss central bank pledged to back the firm.
Credit Suisse shares surged 40 percent on March 16, the most on record, a day after slumping 30 percent intra-day on March 15 that led to a wider fall and trading halt in the majority of European banks.
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Thursday’s rally in Credit Suisse comes after the Swiss central bank pledged to back the firm. The investment banking company will borrow up to 50 billion francs ($53.7 billion) from the central bank.
The downturn in CS shares on March 15 was after reports emerged that the largest shareholder of Credit Suisse, Saudi National Bank denied capital infusion or any assistance. And, today the CS stock was at upper circuit of 20 percent in pre-market session as the Saudi National Bank Chairman denies having any discussions with Credit Suisse about capital infusion/assistance.
In an interview today, the Chairman of Saudi National Bank, Ammar Al Khudairy denied having any discussions with Credit Suisse about assistance. He said, “There has been no discussion with Credit Suisse about providing assistance. I don't know where the word assistance came from. There has been no discussions whatsoever in the past, since October, about Credit Suisse needing more capital, or requiring assistance.”
He added, “It was a manifestation of unfortunate reporting or chatter in the system that we had refused assistance, but we were never asked and, and, to my knowledge, there has not been any assistance sought.”
He sounded confident about Credit Suisse executing its restructuring plan. “Credit Suisse is on its way to do the restructuring that they've been talking about. They have two, three great crown jewels in the business, the private wealth management, particularly in the Middle East, and Asia, the domestic banking, their asset management business, all these are stable, long-term, consistent businesses. They're working on shedding the other more volatile businesses. And we remain very optimistic on them executing the plan, and they execute the plan, the bank is a very sound, it's 150 year old brand, it's a great franchise. And we are optimistic that we'll go back to being what it is,” said Ammar Al Khudairy.
On the panic that has panned out from the recent developments around Credit Suisse, Saudi National Bank Chairman said, “If you look at how the entire banking sector has dropped, unfortunately, a lot of people were just looking for excuses.” “It’s panic, a little bit of panic. I believe completely unwarranted, whether it be for Credit Suisse or for the entire market,” adds Ammar Al Khudairy.
His comments come hours after Credit Suisse announced that it is taking “decisive action” to borrow up to $50 billion from the Swiss National Bank.
He reiterated that the bank will not take its stake beyond the current 9.9 percent. “The message has not changed, it’s the same since October,” he said. “Even if we desired to, there are too many complications from a regulatory and compliance point of view,” he said.
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