After Thursday's drop, Credit Suisse's share price showed a slight recovery in Friday’s intraday trading. The realization is setting in that only a positive surprise can save the bank’s stock from falling further and that quick fixes will only aggravate the situation.

The new all-time low for Credit Suisse shares stands at 2,497 Swiss francs. Thursday’s intraday losses reached as much as 10 percent. Furthermore, the bank’s credit default swaps (CDS) have also been fluctuating heavily. On Friday 10:30 a.m., Credit Suisse shares gained 3.1 percent rising to 2,649 francs only partially recouping some of yesterday's losses.

After Finma’s Credit Suisse Greensill report pushed shares down on Tuesday, various international media reports on Thursday added downward pressure to the stock. Within the bank’s wealth management business, there is an increasing concern that at some stage outgoing client advisors will take their client accounts with them to their new jobs.

Expensive Remedies

The bank’s move to counteract the fund outflow by luring clients with higher interest rates on deposits has done little to reassure investment circles. If anything it shows that holding on to assets under management will come at a high price and will likely result in lower margins, diluting any positive effects from the gains from a higher interest environment.

Restructuring Headwinds

Analysts fear the bank’s lower market capitalization could impact ongoing restructuring and increase financing requirements. Rising financing costs are already likely to push the hoped-for turnaround further back in time.

The bank’s low valuation and depressed share price are also fueling speculation about a possible takeover or a split-up. With the course having already been set for the investment bank with a spin-off into CS First Boston, eyes will be turning to asset management or the Swiss unit.

Next Update

For the share price to stabilize again in the long term, the bank needs to present better fundamental data or a positive surprise needs to come its way. Unfortunately, management’s outlook so far gives little to suggest as much for the first quarter of 2023 at least.

The bank is expecting its asset management unit to suffer a loss in the first three months. It won’t be until April 27, that we get to see these results. Until then, a lot can happen.