Credit Suisse shares dropped to a record low on Tuesday following a report that Switzerland’s financial regulator was examining comments made by the bank’s chair over how much clients had withdrawn from the bank.
Shares in the lender fell as much as 8.4 per cent to SFr2.54, breaking below a previous low of SFr2.70 set three months ago, ending the day at SFr2.66.
The renewed weakness in the stock followed a report by Reuters that Finma was investigating the accuracy of comments made by Axel Lehmann to the Financial Times on December 1, and to Bloomberg a day later, in which he claimed outflows had steadied and in some cases reversed.
The comments by Lehmann came at a critical time for the troubled bank as it sought to raise SFr4bn ($4.3bn) of fresh capital from shareholders.
In an interview with the FT on December 1, Lehmann said outflows had “completely flattened out and . . . partially reversed” following a wave of customer redemptions in October. A day later, in an interview on Bloomberg TV, Lehmann said outflows had “basically stopped”.
The bank revealed in its full-year results this month that outflows continued throughout December and into January across the group, though there were areas of the business that had net inflows, such as Switzerland and the Asia-Pacific region.
At the time of its results, Credit Suisse said parts of the business had experienced inflows in January but did not say whether the group as a whole was seeing outflows reverse.
Customers withdrew SFr111bn from the group in the final three months of 2022, with two-thirds of the outflows coming in October when the bank was hit by rumours on social media about its financial health. The wealth management business accounted for SFr92.7bn of the outflows in the quarter, surpassing the SFr61.9bn expected by analysts.
Credit Suisse declined to comment on the reported probe. Finma also declined to comment.
The bank is embarking on a radical restructuring, including axing 9,000 of its 52,000-strong workforce, in an effort to return to profit and restore investors’ confidence.
However, its forecast earlier this month that it would make a “substantial loss” this year as it absorbed the cost of the revamp spooked investors and led several analysts to cut their recommendations on the shares.
Citigroup analyst Andrew Coombs last week cut his outlook for Credit Suisse to neutral, citing the scale of the outflows and the expected loss this year.
“While management provided some reassurance on flows and on capital and liquidity on the [analyst] call, they also raised serious questions on the future trajectory of profits with the CEO pointing to another ‘substantial’ loss in 2023,” said Coombs.