By reducing the debt load, Credit Suisse is looking to restore investor confidence and strengthen its shares, which have fallen sharply since the start of the year and have written off more than 50%.
The bank said the debt repurchase “will allow it to take advantage of market conditions to buy back the debt at attractive prices”. This had a positive effect on its shares, which gained 5.7% on the Swiss stock exchange on Friday around 11:30 CET.
“It’s an opportunistic move to take advantage of market conditions, which could be reassuring for some investors,” Vontobel analyst Andreas Venditti commented on the bank’s decision to Reuters.
Credit Suisse CEO Ulrich Körner has already tried to reassure employees and financial markets over the weekend, assuring them that one of Europe’s largest banks has solid liquidity and capital. However, he admitted that the bank faces a critical moment before embarking on a new restructuring plan. The bank wants to announce the plan on October 27th.
Credit Suisse shares are down sharply, having already lost a record 60% this year.
Economic
With his statement, Körner responded to the price of the bank’s bankruptcy insurance, which began to rise significantly last week. The price of so-called credit default swaps, which are used to insure against default, increased by 15% last week, the highest since the height of the global financial crisis in 2009.
Bloomberg sources said some of the bank’s customers use this data to ask questions, negotiate more favorable prices, or use competitor services. The bank has not commented on this information.
Rating agency Moody’s expects Credit Suisse’s losses to rise to $ 3 billion (CZK 75 billion) by the end of the year, potentially reducing its net worth below the key level of 13 percent, he said. Moody’s chief analyst told Reuters on Thursday.
Meanwhile, the bank is working on a possible sale of some assets and assets in an attempt to return to profitability. For example, she will put her famous Savoy hotel in Zurich for sale, which, according to Swiss media, could earn her around 400 million francs (10.1 billion CZK).
