SANKT MORITZ, SWITZERLAND - AUGUST 16, 2018: Credit Suisse, swiss bank sign on window in Sankt Moritz, Switzerland
Credit Suisse share price has come under intense pressure as investors worry about the company’s turnaround. In New York, the CS stock price tumbled to a low of $3.70, which is about 73% below its all-time high. As a result, its total market cap has crashed to about $10 billion, making it the same size as Julius Baer, the small wealth management company.
Credit Suisse is one of the biggest fallen angels of this year as its stock has crashed by more than 60%. As a result, the company has underperformed all other large European banks like Lloyds, Barclays, UBS, and Deutsche Bank.
Credit Suisse’s business has moved from one scandal to another. For example, a few years ago, it ousted Tidjane Thiam as the CEO following a spying scandal. After that, the firm lost more than $2.8 billion when Greensill collapsed. This scandal was followed by the next collapse of Bill Hwang’s Archegos Capital Management in which the bank lost over $5 billion.
Credit Suisse’s scandals continued after the then Chairman Antonio Horta-Osario resigned after breaking Covid rules in the UK. The bank has also been a player in the Tuna bonds scandal and also accused of facilitating crime. All these factors have led to huge losses and worries about whether the company will continue as a going concern.
Still, with the Credit Suisse share price down by more than 60% this year could it be a good buying opportunity. Some analysts believe that the company will implement a turnaround that could save its brand. They cite the company’s strong balance sheet considering that it has a Core Tier 1 ratio of 13.
The main concern is that the firm will need much more money to execute a turnaround. As such, it could be forced to raise capital by selling shares. Another alternative is to sell its assets such as its SPG products to either Apollo or BNB Paribas. The bank is also considering renaming its American investment bank as First Boston, in a move that could see it sell or list it.
The daily chart shows that the Credit Suisse stock price has been in a strong bearish trend in the past few months. This sell-off gained steam when the shares crashed below the important support level at $5, which was the lower side of the descending triangle pattern. The stock has continued to move below all moving averages while the RSI has moved to the oversold level.
Therefore, while Credit Suisse is extremely risky, I believe that it will see a brief rebound ahead of the strategy meeting later this month. This could see it retest the important resistance at $5. A drop below the support at $3.7 will invalidate the bullish view.
This post was last modified on Oct 04, 2022, 08:51 BST 08:51