Credit Suisse tanks after top shareholder rules out investments

Shares of Credit Suisse dropped more than 21% in pre-market trading after the Swiss banking giant’s top shareholder said he would not plow more money into the struggling bank.

Ammar Al Khudairy, the chairman of Saudi National Bank, was asked by Bloomberg News whether he would invest more in Credit Suisse, the Zurich-based lender which said on Tuesday that it found “material weaknesses” in its financial reporting over the last two years.

Credit Suisse’s troubles are sending shivers throughout the global banking sector which is still reeling from the recent collapse of US-based lenders Silicon Valley Bank and Signature Bank.

“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Al Khudairy told Bloomberg News.

“We cannot because we would go above 10%. It’s a regulatory issue,” he told Reuters in a separate interview.

Shares of Credit Suisse, which have shed around a third of their value in just three months, were off 21% at $1.99 in premarket trades on Wednesday.

The Saudi lender acquired a stake of almost 10% last year after it took part in Credit Suisse’s capital raising and committed to investing up to $1.5 billion.

The cost of insuring the company’s bonds against default also shot up.

Five-year credit default swaps on Credit Suisse debt widened to 533 basis points from 549 bps at last close, according to data from S&P Global Market Intelligence.

Credit Suisse on Tuesday published its annual report for 2022 saying the bank had identified “material weaknesses” in controls over financial reporting and not yet stemmed customer outflows.

Switzerland’s second-biggest bank is seeking to recover from a string of scandals that have undermined the confidence of investors and clients.

Customer outflows in the fourth quarter rose to more than $120 billion.

Axel Lehmann, the chairman of Credit Suisse, told CNBC on Wednesday that the bank was working to emphasize “de-risking” its balance sheet.

When asked if the bank would accept government assistance, Lehmann replied: “That’s not the topic.”

“We are regulated, we have strong capital ratios, very strong balance sheet,” he told CNBC.

“We are all hands on deck. So that’s not the topic whatsoever.”

Follow The Post’s coverage of Silicon Valley Bank’s collapse

Credit Suisse’s woes are weighing heavily on Wall Street. Dow futures were down a whopping 518 points before the opening bell on Wednesday while the S&P 500 futures dropped by around 1.6%.

Nasdaq futures were down more than 1.4% before trading kicked off on Wall Street on Wednesday.

The drop in Credit Suisse shares reignited some of the jitters among investors about the resilience of the global banking system in the wake of the collapse of SVB.

With Post Wires