Credit Suisse Group's shares fell as much as 31 per cent to a record low in Zurich on Wednesday, after its top shareholder, whose stake has lost more than one third of its value in three months, ruled out investing any more in the troubled Swiss bank as a bigger holding would bring additional regulatory hurdles.
Shares later pared some losses, down 15 per cent as of 3.31pm in Zurich.
“The answer is absolutely not, for many reasons outside the simplest reason, which is regulatory and statutory,” Saudi National Bank chairman Ammar Al Khudairy said in an interview with Bloomberg TV on Wednesday.
That was in response to a question on whether the bank was open to further injections if there was another call for additional liquidity.
For global investors still on edge after the rapid-fire collapse of three regional US banks, the growing Credit Suisse crisis provided a new reason to sell risky assets and pile into the safety of government bonds.
Benchmark indexes in Europe sank 2 per cent and the S&P 500 lost 1.3 per cent. Short-term German bonds and Treasuries soared, pushing their yields down by more than 40 basis points.
“Markets are very sensitive to the negative news flow after the surprise of seeing a US bank disappear from one day to the other and the contagion that hit other US regional banks,” said Francois Lavier, head of financial debt strategies at Lazard Freres Gestion.
“In a context where market sentiment is already weakened, not much is needed to weaken it even further.”
The cost of insuring the bonds of Credit Suisse against default in the near term approached a level that typically signals serious investor concerns.
The bank is only months into a complicated turnaround plan under which it will spin out the investment banking unit while focusing on its key wealth management business.
That effort risks being complicated by market unease across financials after the collapse of several US regional banks.
Chief executive Ulrich Koerner on Tuesday said the bank’s financial position was sound, including a so-called liquidity coverage ratio, on which it can draw to fulfil its obligations, of about 150 per cent.
He said that the bank saw inflows on Monday amid the market turmoil and was ahead of schedule on its turnaround plan.
“Nobody is pleased by the share price development but we manage what we can manage and this is the execution of our plan,” Mr Koerner said.
Saudi National Bank, which is 37 per cent owned by the kingdom’s sovereign wealth fund, became Credit Suisse’s biggest shareholder late last year after acquiring a 9.9 per cent stake in the lender for 1.4 billion Swiss francs ($1.5 billion).
The stake has lost more than 500 million francs in a matter of months.
Mr Al Khudairy has consistently said his bank does not want to take its stake beyond the current level. He said in October that he “likes” Credit Suisse’s new leadership and their resolve to execute on its turnaround plan, but any additional equity for the moment was “out of the question".
He said on Wednesday that adding to the stake would bring additional regulatory hurdles.
“If we go above 10 per cent, all new rules kick in whether it be by our regulator or the Swiss regulator or the European regulator,” he said.
“We’re not inclined to get into a new regulatory regime. I can cite five or six other reasons, but one reason is there is a glass ceiling and we’re not going to entertain going beyond it.”
Mr Al Khudairy also said his bank was not interested in taking a stake in CS First Boston, the investment bank that Credit Suisse is carving out.
While Mr Koerner cited key metrics to demonstrate the bank’s financial strength, concerns about its future are persisting.
The CDS (credit default swap) level is about nine times that of Deutsche Bank and 18 times that of UBS Group.
The CDS curve is also deeply inverted, meaning that it costs more to protect against an immediate failure at the bank instead of a default further down the line.
Speaking earlier on Wednesday, chairman Axel Lehmann batted away any notion that the bank would need government assistance, saying it “isn’t a topic” for the bank as it seeks to shore up confidence among clients, investors and regulators after a series of missteps.
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Dhadak 2
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Starring: Siddhant Chaturvedi, Triptii Dimri
Rating: 1/5
Our House, Louise Candlish,
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MATCH INFO
Juventus 1 (Dybala 45')
Lazio 3 (Alberto 16', Lulic 73', Cataldi 90 4')
Red card: Rodrigo Bentancur (Juventus)
Defending champions
World Series: South Africa
Women’s World Series: Australia
Gulf Men’s League: Dubai Exiles
Gulf Men’s Social: Mediclinic Barrelhouse Warriors
Gulf Vets: Jebel Ali Dragons Veterans
Gulf Women: Dubai Sports City Eagles
Gulf Under 19: British School Al Khubairat
Gulf Under 19 Girls: Dubai Exiles
UAE National Schools: Al Safa School
International Invitational: Speranza 22
International Vets: Joining Jack
Recent winners
2002 Giselle Khoury (Colombia)
2004 Nathalie Nasralla (France)
2005 Catherine Abboud (Oceania)
2007 Grace Bijjani (Mexico)
2008 Carina El-Keddissi (Brazil)
2009 Sara Mansour (Brazil)
2010 Daniella Rahme (Australia)
2011 Maria Farah (Canada)
2012 Cynthia Moukarzel (Kuwait)
2013 Layla Yarak (Australia)
2014 Lia Saad (UAE)
2015 Cynthia Farah (Australia)
2016 Yosmely Massaad (Venezuela)
2017 Dima Safi (Ivory Coast)
2018 Rachel Younan (Australia)
Votes
Total votes: 1.8 million
Ashraf Ghani: 923,592 votes
Abdullah Abdullah: 720,841 votes
What the law says
Micro-retirement is not a recognised concept or employment status under Federal Decree Law No. 33 of 2021 on the Regulation of Labour Relations (as amended) (UAE Labour Law). As such, it reflects a voluntary work-life balance practice, rather than a recognised legal employment category, according to Dilini Loku, senior associate for law firm Gateley Middle East.
“Some companies may offer formal sabbatical policies or career break programmes; however, beyond such arrangements, there is no automatic right or statutory entitlement to extended breaks,” she explains.
“Any leave taken beyond statutory entitlements, such as annual leave, is typically regarded as unpaid leave in accordance with Article 33 of the UAE Labour Law. While employees may legally take unpaid leave, such requests are subject to the employer’s discretion and require approval.”
If an employee resigns to pursue micro-retirement, the employment contract is terminated, and the employer is under no legal obligation to rehire the employee in the future unless specific contractual agreements are in place (such as return-to-work arrangements), which are generally uncommon, Ms Loku adds.
MATCH DETAILS
Chelsea 4
Jorginho (4 pen, 71 pen), Azpilicueta (63), James (74)
Ajax 4
Abraham (2 og), Promes (20). Kepa (35 og), van de Beek (55)
How much do leading UAE’s UK curriculum schools charge for Year 6?
- Nord Anglia International School (Dubai) – Dh85,032
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*Annual tuition fees covering the 2024/2025 academic year
More from Rashmee Roshan Lall
BMW M5 specs
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Some of Darwish's last words
"They see their tomorrows slipping out of their reach. And though it seems to them that everything outside this reality is heaven, yet they do not want to go to that heaven. They stay, because they are afflicted with hope." - Mahmoud Darwish, to attendees of the Palestine Festival of Literature, 2008
His life in brief: Born in a village near Galilee, he lived in exile for most of his life and started writing poetry after high school. He was arrested several times by Israel for what were deemed to be inciteful poems. Most of his work focused on the love and yearning for his homeland, and he was regarded the Palestinian poet of resistance. Over the course of his life, he published more than 30 poetry collections and books of prose, with his work translated into more than 20 languages. Many of his poems were set to music by Arab composers, most significantly Marcel Khalife. Darwish died on August 9, 2008 after undergoing heart surgery in the United States. He was later buried in Ramallah where a shrine was erected in his honour.
AT%20A%20GLANCE
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Killing of Qassem Suleimani
Killing of Qassem Suleimani
