Credit Suisse CEO reassures staff bank has solid balance sheet amid market speculation

theguardian.com:

The chief executive of Credit Suisse has attempted to reassure staff the globally significant Swiss bank has a solid balance sheet after credit markets rated its risk of default as the highest in a decade.

In a memo to staff, Ulrich Körner said there were “many factually inaccurate statements being made” in media coverage of the bank’s crisis, which has seen its share price plunge by 56% this year.

The interest rate charged on Credit Suisse credit default swaps – insurance against the bank defaulting on its borrowings – spiked 6 basis points to 2.47% on Friday, the highest level in 10 years, as market players continued to lose confidence in the bank. The swaps began the year costing 0.57%.

Shares in the bank rose 3.87% to close at 3.98 Swiss francs (£3.64) on Friday, but the uptick did nothing to quell market speculation about the company’s dire financial position.

It comes as Credit Suisse prepares to reveal a plan to get itself out of its financial hole, which may include job cuts, selling assets and asking investors for a fresh infusion of cash, on 27 October.

“I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank,” Körner said in the staff memo on Friday.

“We are in the process of reshaping Credit Suisse for a long-term, sustainable future – with significant potential for value creation.

“Given the deep franchise we have, with a longstanding focus on serving some of the world’s most successful entrepreneurs, I am confident we have what it takes to succeed.”

Credit Suisse is among 30 “globally significant banks” listed by the central banks’ bank, the Bank Of International Settlements, that are required to set aside extra capital to absorb