- Credit Suisse's (CS, $4.01) stock dropped 4%, hitting a new low, causing the bank's overall value to decline by 57% this year. The 5-year credit default swap, meanwhile, reached 250 on Friday.
- But analysts are not sure if this all means that the bank is heading for bankruptcy. According to reports, the bank's CEO reassured staff that even though the stock price dropped, it still had a strong asset and liquidity position, a capital buffer of up to $100B, and high-quality liquid assets close to $238B.
- The bank has struggled to recover from a $5.5B loss it made on loans to Bill Hwang's Archegos Capital Management as it was unable to liquidate its shares as rapidly as rivals Goldman Sachs and Morgan Stanley when the family office failed.
Why it matters
The bank may need to raise an additional 4 to 6 billion francs, according to analysts, in order to support whatever reorganization is taking place and to serve as a cushion against capital outflows.
