Posted by: Lachlan Hines. Mar 14, 2023 at 5:43 pm AEST

Credit Suisse has been facing a slew of issues in recent times, with a series of scandals resulting in material losses for the bank.

The most recent development involves Credit Suisse’s largest investor, Saudi National Bank, announcing that it could not provide the Swiss bank with any further financial assistance due to regulatory constraints, according to a Reuters report. This has sparked further concerns about Credit Suisse’s financial stability and caused a drop in share prices.

The Saudi National Bank took a 9.9% stake in Credit Suisse last year as part of the Swiss lender’s $4.2 billion capital raise to fund a massive strategic overhaul aimed at improving investment banking performance and addressing a litany of risk and compliance failures.

However, the latest regulatory constraints prevent the Saudi National Bank from providing any further financial assistance to Credit Suisse. While the Saudi National Bank chairman Ammar Al Khudairy stated that they are happy with Credit Suisse’s transformation plan and suggested that the bank is unlikely to need extra money, this news has nonetheless added to the bank’s challenges.

Credit Suisse has also recently announced that it will borrow almost $54 billion from the Swiss central bank to reinforce the group after a plunge in its share prices. This announcement came just hours after the Swiss National Bank said that capital and liquidity levels at the lender were adequate for a “systemically important bank”, even as it pledged to make liquidity available if needed. The central bank loan of up to 50 billion francs ($53.7 billion) will “support… core businesses and clients,” according to Credit Suisse, which also said that it was making buyback offers on about $3 billion worth of debt.
These measures have been taken to strengthen Credit Suisse as it continues its strategic transformation to deliver value to its clients and other stakeholders.

CEO Ulrich Koerner stated that he and his team are resolved to move forward rapidly to deliver a simpler and more focused bank built around client needs. However, these efforts will take time and will require a significant amount of financial support, especially in light of the material losses the bank has suffered in recent scandals.

The Archegos Capital Management collapse earlier this year resulted in Credit Suisse losing $4.7 billion, which has had a significant impact on the bank’s financial performance.

The Greensill Capital scandal has also caused losses for the bank, as it was a key lender to the supply chain finance firm.

The Wirecard scandal further exacerbated Credit Suisse’s issues, as it had been a lender to the now-collapsed German payments company. All of these scandals have contributed to a loss of confidence in Credit Suisse’s risk management practices and have raised concerns about the bank’s overall financial stability.

Credit Suisse has stated that it is committed to improving its risk management practices and addressing the issues that have led to these scandals. However, rebuilding trust in the bank will take time, and the financial losses resulting from these scandals have already taken a toll on the bank’s financial performance. The recent regulatory constraints preventing the Saudi National Bank from providing further financial assistance have added to the bank’s challenges, and the need for the central bank loan highlights the urgency of the situation.

In conclusion, Credit Suisse has been facing a series of challenges and scandals that have resulted in material losses for the bank. The recent announcement from Saudi National Bank that it cannot provide further financial assistance due to regulatory constraints has added to the bank’s challenges, as has the need to borrow almost $54 billion from the Swiss central bank. The Archegos Capital Management collapse, the Greensill Capital scandal, and the Wirecard scandal have all contributed to a loss of confidence in Credit Suisse’s risk management practices and overall financial stability.