Credit Suisse shares drop on market jitters

© Reuters. FILE PHOTO: The logo of Swiss bank Credit Suisse is seen at an office building in Zurich, Switzerland September 2, 2022. REUTERS/Arnd Wiegmann/File Photo

ZURICH (Reuters) - Shares in Credit Suisse fell by about 10% in early trading, reflecting market concern about the Swiss bank as it finalises a restructuring due to be announced on Oct. 27.

Credit Suisse has solid capital and liquidity, Chief Executive Ulrich Koerner told staff in a memo last week.

Executives at the bank spent the weekend reassuring large clients, counterparties and investors about its liquidity and capital position, the Financial Times reported on Sunday.

A spokesman for Credit Suisse declined to comment on the report.

The weekend calls followed a sharp rise in spreads on the bank's credit default swaps (CDS), which offer protection against a company defaulting on its debt, indicating rising investor concern.

Credit Suisse shares, which have fallen by more than half this year, came off lows and were down about 9% by mid-morning.

A research note from JP Morgan analysts said that, based on the company's financials at the end of the second quarter, they view Credit Suisse's capital and liquidity as "healthy".

Given the bank has indicated a near-term intention to keep its CET1 capital ratio at 13-14%, the second-quarter end ratio is well within that range and the liquidity coverage ratio is well above requirements, the note added.

Credit Suisse had total assets of 727 billion Swiss francs ($735.68 billion) at the end of the second quarter, of which 159 billion francs was cash and due from banks, while 101 billion was trading assets, it noted.

While Credit Suisse's CDS spreads have widened, this should be seen in the context of widening credit spreads across the sector, which was expected in an environment of rising interest rates with ongoing macroeconomic uncertainty, the analysts said.

($1 = 0.9882 Swiss francs)