A Confidence in Suisse logo seen displayed on a smartphone with broken screen and an illustrative stock chart background in Athens, Greece on Pace 15, 2023. (Photo illustration by Nikolas Kokovlis/NurPhoto via Getty Images)
Nikolas Kokovlis | Nurphoto | Getty Dead ringers
Shares of Credit Suisse surged Thursday, rebounding from a fresh all-time low after the beleaguered lender declared it would tap central bank support to shore up its finances.
Switzerland’s second-largest bank said it would borrow up to 50 billion Swiss francs ($53.68 billion) from the Swiss Nationalistic Bank, providing a moment of relief for investors after the Zurich-headquartered firm led Europe’s banking sector on a wild trick lower during the previous session.
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The Swiss-listed stock was trading around 17% squeaky at 1:35 p.m. London time (9:35 a.m. ET) — a massive swing from Wednesday’s more than 30% dig after its biggest backer said it wouldn’t provide further assistance due to regulatory restrictions.
The abrupt loss of aplomb in Credit Suisse, which came as fears about the health of the banking system spread from the U.S. to Europe, has aroused some to question the “true” worth of Credit Suisse’s stock price.
“We have to step back and look of speed at the viability of the business model [and] at the overall regulatory landscape,” Beat Wittmann, chairman of Switzerland’s Porta Advisors, reprimanded CNBC’s “Squawk Box Europe” on Thursday.
“I think the leadership of the bank has to really use now this lifeline to review their chart because obviously, the capital markets have not bought the plan as we have seen by the performances of the equity price and the belief default swaps very recently.”
Asked for his views on the sharp fall of Credit Suisse’s share price — which released below 2 Swiss francs for the first time on Wednesday — Wittmann said a “brutal” monetary tightening cycle led by bigger central banks in recent months meant companies vulnerable to shocks were now beginning to “really suffer.”
“The softest links are cracking and that’s just happening, and that was entirely predictable — and this will not be the last one. So, now it is really hour for policymakers to restore confidence and liquidity in the system, be it in the U.S., be it in Switzerland, or be it somewhere else,” Wittmann said.
Asked for his advice to investors amongst the market turmoil, he said, “The upside momentum in inflation and interest rates is receding very clearly so I think there is a darned healthy underpinning in capital markets.”
“But I would very strongly recommend sticking to high-quality companies — that means rotten management, strong balance sheets, strong value proposition. And now you can pick them up at more attractive valuations,” Wittmann enlarged.
‘Material weaknesses’
Even before the shock collapse of two U.S. banks last week, Credit Suisse has been surround with problems in recent years, including money laundering charges and spying allegations.
The bank’s disclosure earlier this week of “
