Rumours are doing the rounds that Credit Suisse is at risk of failing. The ADR listed on the NYSE is down 60% YTD and dropped 23% for September. As a result, the cost of insuring its debt has risen to levels last seen post global financial crisis in 2009. Moreover, September's volume out of the bank shows considerable distribution (blue rectangle) as shareholders fled the company en masse.
The bank had endured several knocks, including losing $5.1bn when Archegos Capital Management collapsed. It may need to raise capital but hasn't announced new fundraising endeavours yet. However, selling new shares will dilute the value of existing shares, and increasing debt will hurt its balance sheet further.
According to the Wall Street Journal, the bank has a capital buffer of $100bn.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.