Credit Suisse's lending business turns positive as market pressure mounts
Credit Suisse Group CS shares have been volatile this week due to concerns about the Swiss bank's financial health. It appears that some of the firm's lending clients are pulling back.
One of the lending businesses of Credit Suisse has reversed some share lending transactions in recent days because of concerns about the bank's financial health, according to Bloomberg.
Credit Suisse has temporarily suspended deals with the bank because of mounting market pressure, which has forced it to withdraw available shares, according to people familiar with the matter.
The lending unit of Credit Suisse saw less than 5% of the total pool pulled, and there was no funding impact for the lender. The Swiss bank acts as a middleman for securities lending deals, but the report shows that several investors have approached Credit Suisse to inquire about new risks.
Reports that suggested Credit Suisse could be battling liquidity issues sent the lender's shares to a lower level on Monday morning before reversing and turning positive for the session. Swiss bank's credit default swaps, which provide investors with protection against financial risks and essentially measure how a company's financial health is perceived by the market, soared to record levels.
Credit Suisse's Credit Default Swaps Spike To Near 2008 Levels, Rumors Of Lehman-Like Collapse Floated, Bank Steps In To Allay Concerns
Why It Matters: Credit Suisse has faced questions about its risk management practices in the past. Following the collapse of the U.S. investment firm Archegos Capital, the bank has been plagued by a series of scandals and took a $5.5 billion hit.
In the company's most recent quarter, Credit Suisse reported a net loss of $1.6 billion, down from earnings of more than $250 million a year ago, according to Benzinga Pro.
Credit Suisse is considering a turnaround plan. The Swiss bank recently said it is in the process of a strategy review that includes potential divestitures and asset sales.
The strategic review aims to make Credit Suisse's wealth management franchise stronger and transform the investment bank into a capital-light, advisory-led banking business with an increased focus on markets.
Credit Suisse is evaluating strategic options for its securitized products business, which includes attracting third-party capital and reducing the firm's absolute cost basis.
Credit Suisse is due to announce its third quarter financial results on October 27th. CS Price Action: Credit Suisse has a 52 week high of $1.04 and a 52 week low of $3.70.
After-hours, the stock was up 12.22% at $4.50, but after-hours was down 0.44% at $4.48.