Shares of Credit Suisse Group AG (NYSE:CS) slumped over 9.13% in pre trading session on Friday after the company to a historic low as investors expressed concerns about the ailing lender’s forthcoming strategy overhaul and capital situation.
The bank issued a statement on Thursday in response to a Reuters story that it is considering severe measures such as abandoning the US market for its investment bank. The company is also debating whether it will need to seek funds through asset sales or a public offering to support any movements it intends to make under a new strategy that will be unveiled next month.
A bank official said in a statement late Thursday, “Credit Suisse will not leave the US market.” “Any story implying otherwise is utterly untrue and completely unjustified.”
According to Reuters, Credit Suisse is seeking investors for a prospective capital raising. Credit Suisse, according to Deutsche Bank AG analysts, has a capital deficit of at least 4 billion Swiss francs ($4.1 billion) to enhance its financial health, fund its reorganization, and sustain growth. The Swiss bank’s executives have stated that they are satisfied with the firm’s capital situation.
Credit Suisse dropped up to 10% on Friday and was trading 9.6% down at 4.20 Swiss francs at 1:27 p.m. in Zurich. Since the twin scandals involving Greensill Capital and Archegos Capital Management early last year, the stock has dropped by around two-thirds.
As part of its second reorganization in less than a year, the bank is deciding which companies to eliminate, depart, or maintain. Following a run of losses and errors, new CEO Ulrich Koerner and Chairman Axel Lehmann are attempting to restore trust in the institution and return it to profitability.
Credit Suisse’s senior executives and board members are considering a variety of strategies in order to halt the unprecedented market collapse. According to Bloomberg, the firm has been talking to potential purchasers for its securitized products department, a trading business with $75 billion in assets, and has floated the possibility of awarding dealmakers an ownership share in its unit, implying a future spinout.
