Negative reports about Credit Suisse are almost a part of everyday life, but this Monday morning is unusual, even for the big bank in crisis! CS stock fell more than 10 percent shortly after the stock market opened.
It falls below the 3 franc limit for the first time in its history. The fact that the shares of the once-proud big bank are trading at such an exorbitant price causes groans to be heard on Paradeplatz.
The stock price drop is for good reason: Credit Suisse finally decided to raise capital at its extraordinary general meeting last week. The capital increase will be included in the share price for the first time this Monday, and the shares will be traded in “legacy rights,” as the jargon correctly says.
Even the experts were surprised
The bank will receive an additional CHF 4 billion from the capital increase, of which CHF 1.5 billion will come from the Saudi National Bank. The Saudis will thus become one of the largest owners of the Swiss bank. For the bank, raising capital means fresh money. For existing shareholders, it means dilution of the share price. Because new CS holders, including the Saudi National Bank, receive shares for their entry. This means that existing co-owners’ shares automatically depreciate.
Observers are surprised that the CS price has dropped as a result of the capital increase. “The price is falling more than expected from the sale of subscription rights alone,” says Vontobel analyst Andreas Venditti. He proves: “The CS summit has yet to reassure shareholders, uncertainty and volatility remain high.”
The analyst also does not rule out the possibility that, as has happened many times in the last few months, some investors may push the stock further down by relying on falling prices in CS.
two-thirds lost
What can CS summit do to slow the stock market downturn? “Not much in the short term,” says Venditti. “She should try to calm down more.” This was the weekend, for example, when CS Switzerland boss André Helfenstein (56) assured in an interview with the “Sonntagszeitung” that very few customers had their accounts closed. The sedative pill seems to have had little effect.
In the morning hours, the CS price went above the 3 franc limit again. From its previous values - at the beginning of the year the share traded for more than 9 francs! – but he’s too far away.