At a time when the small bank crisis is spreading in the US, it is even more difficult for Credit Suisse to restore investor confidence.

On the afternoon of Wednesday, March 15, CMAQ's quotation showed that the one-year credit default swap (CDS) for Credit Suisse bonds soared to nearly 1,000 points from the price of 835.9 basis points at the end of business on Tuesday, about 20 times the price of UBS's one-year CDS and 10 times that of Deutsche Bank. The cost of providing default protection for Credit Suisse Group's bonds is close to 1,000 points, indicating that investors' fears have exploded.

The Credit Suisse CDS curve also changed from a normal upward pattern last Friday to an inversion, which means that the cost of preventing an immediate default is higher than the cost of future default.

As of press release, the pre-market decline of Credit Suisse's US stock widened to about 22%, reaching a record low.

The situation worsened when the largest shareholder refused more aid

After Credit Suisse revealed a thunderstorm of losses for two years in a row and expected serious losses again this year, although difficult restructuring decisions were made, investors were frightened by a series of negative news recently revealed by the group. Coupled with the spread of the recent Silicon Valley banking crisis, Credit Suisse's stock price came under further pressure.

Even Credit Suisse's largest shareholder surrendered to panic and refused to provide more aid to the bank.

Saudi National Bank Chairman Ammar Abdul Wahed Al Khudairy said in an interview with the media on the sidelines of the financial industry conference,“Definitely” there will be no more aid to Credit Suisse.He also said,Further liquidity support will definitely not be provided to Credit Suisse.

The answer is absolutely no, and there are many reasons other than the simplest of which are regulation and legislation.

However, just yesterday, Credit Suisse revealed that the bank had discovered major flaws in the internal control of 2021 and 2022 financial reports, and the auditors gave negative opinions.

Credit Suisse said last week that US Securities and Exchange Commission (SEC) officials inquired about the bank's revisions to the relevant cash flow statements for fiscal 2019 and 2020, as well as related control measures. Credit Suisse did not directly explain whether the SEC's concerns have been addressed, but said it has found “significant flaws” in its internal controls over financial reporting.

Last Thursday, at the “last minute” before Credit Suisse released its earnings report, the US Securities and Exchange Commission (SEC) filed a technical inquiry on the revisions previously disclosed by Credit Suisse's consolidated cash flow statement ending December 31, 2020 and 2019, which caused Credit Suisse to delay the publication of its 2022 annual report.

Can Credit Suisse save itself successfully without relying on the government?

In an increasingly difficult situation, Credit Suisse is still trying its best to calm investors' emotions.

Credit Suisse Group Chairman Axel Lehmann said at the financial sector meeting held in Saudi Arabia on Wednesday,Government aid is “not a topic” for Credit Suisse.It is implied that Credit Suisse does not need government aid.

In response to concerns that Credit Suisse might go out of business like Silicon Valley banks, Lehmann said that it is inaccurate to compare Credit Suisse's current problems with the recent collapse of Silicon Valley banks, especially since these two banks are regulated differently.

We have a strong capital adequacy ratio and a strong balance sheet.

We have taken our medicine.

Credit Suisse CEO Ulrich Koerner also promised on Tuesday, saying that Credit Suisse has begun implementing a three-year plan to restore profits and will be patient with it.

According to Koerner, Credit Suisse's Tier 1 capital adequacy ratio in the fourth quarter of last year was 14.1%, and the liquidity coverage ratio was 144%. The latter has increased to around 150%.

Koerner also said that after several regional banks in the US went out of business, the financial industry may experience a broader sell-off. He believes that the US regulator's bailout plan can protect the entire nation's deposits.

At the beginning of October last year, concerns about Credit Suisse's financial health caused the bank to experience a record outflow of client funds.Although capital outflows have since returned to normal low levels, the situation has not been reversed.

According to Koerner, Credit Suisse experienced a “massive inflow of capital” on Monday. Previously, in order to win back customers, Credit Suisse offered large customers more attractive deposit interest rates than their peers.

Editor/phoebe