Credit Suisse stock and bonds continue to fall. Today, the bank's Chairman Axel Lehmann is making a highly publicized appearance in London. Is he the right man to break the downward spiral?

Last week, Axel Lehmann was speaking at the University of St. Gallen (HSG) at the ceremonial opening of the Center for Financial Services Innovation (FSI-HSG) where the Chairman said «well-educated young people are central to Switzerland and Credit Suisse,» which has funded the establishment of several professorships as a partner in the new institute.

Although Lehmann did not directly refer to the current turmoil at Credit Suisse, his appearance was so confident and calm that one could only marvel, reported one participant at the event. «The audience in the hall probably went home with the impression that things were not so bad at Credit Suisse after all,» says the attendee.

Strange Performance Ex-Boss

Today, at noon, Lehmann seeks to repeat the miracle of St. Gallen. The 63-year-old Swiss banking and insurance expert is scheduled to appear at a «Financial Times» event in London. He will have to answer questions from the host and audience, an ideal opportunity to once again demonstrate his composure given the situation of «his» bank. The impact of the appearance in the Anglo-Saxon realm is likely to be considerable.

So many were already been talking about Credit Suisse at yesterday's gathering. Former CEO Tidjane Thiam made a self-serving appearance in an attempt to distance himself from the crisis at the financial institution. Debacles such as the bankruptcy of the New York financial firm Archegos and the forced closure of Greensill funds did not occur on his, Thiam emphasized.

However, he had to step down as bank chief in February 2020 under pressure after the scandal surrounding the spying on Credit Suisse employees had continued to spread.

Record High CDS Spreads

Lehmann's UBS counterpart Colm Kelleher also spoke at the conference, where he reported Credit Suisse clients were proactively approaching UBS, although he said UBS does not want to actively profit at the expense of its competitor's difficulties.

Meanwhile, Credit Suisse stocks and bonds are in a downward spiral. Compared to last Friday's closing price, the share price has since lost more than 10 percent and has been unable to break through the 3-franc ceiling. Bond prices were also pressured, approaching lows seen in October, while default insurance (CDS) for the bank's bonds climbed to new record levels.

Lehmann is now expected to comment on these dislocations in London at noon today.

Sharks are Circling

A communications «High Noon» awaits him at the summit. As in the 1952 Western classic, Credit Suisse is seemingly abandoned by investors, even though the current share price declines are mainly due to technical reasons. With the start of subscription rights trading after last week's capital increase, pressure on the share price was expected.

The success of the capital increase and the turnaround of the bank depends on the exercise of the subscription rights, but bond investors are also nervous. The volatility in share prices, in turn, is a feast for speculators.

«When there is blood in the water, the sharks come,» credit analyst Guido Versondert of Zurich-based research boutique Independent Credit View (I-CV) observed to finews.ch. Other market watchers worry that retail investors might refrain from taking up new shares because of Credit Suisse's recent history.

Meme Investor Target

Credit Suisse's problems have taken on a momentum of their own, as they did in early October when the country's second-largest bank became the target of meme investors who spread disaster reports about the institution on social media. The reports were completely unsubstantiated, but they put senior management under pressure to act. A few days later, the bank announced it would buy back its debt securities worth around 3 billion Swiss francs.

That had a calming effect until now. Shares are trading 26 percent below their October low.

The communication situation is unpredictable. Unlike in October, it is now mainly Anglo-Saxon leading media such as «Forbes» and the «Financial Times» along with agencies «Reuters» and «Bloomberg» who relentlessly report on the developments at the Swiss bank. In this respect, the Credit Suisse crisis has a global dimension.

Lehmann Upon Thames

Whether these developments can be dealt with calmly and with Swiss conscientiousness remains to be seen. While Lehmann may be well connected at home because of his career with Swiss financial groups  Zurich, UBS, and now Credit Suisse. But to take pressure off the bank's share prices, contact with major investors and professional speculators in London and Wall Street is now probably far more important. The appearance of the Thames is a step in the right direction.

This event should be an initial step followed by further appearances on the international stage by Lehmann and CEO Ulrich Koerner, a German and Swiss citizen. Otherwise, the new «Swissness» at the top will become a liability for the bank.