Credit Suisse hit by legal action from US investors amid banking turmoil

US investors in Credit Suisse have hit the beleaguered Swiss bank with legal action, claiming that it overstated its prospects before this week’s shares crash.

The lender suffered a rapid sell-off, with shares plunging on Wednesday by as much as 30% at one point after comments from Credit Suisse’s largest shareholder, Saudi National Bank, which said it was unable to pump in more cash because of regulatory restrictions limiting its holding to below 10%.

The Swiss central bank later stepped in to offer Credit Suisse a £44.5bn lifeline and the shares rallied, recovering most of their losses on Thursday.

However, Rosen Law Firm, a class action lawsuit specialist, has lodged a complaint in a court in Camden, New Jersey, which claims the bank made “materially false and misleading statements” in its 2021 annual report.

The lawsuit would represent the first mounted against Credit Suisse since the crisis rapidly devalued shareholders’ investments.

Last week Credit Suisse admitted it had “material weaknesses” in its reporting and controls procedures when it published its delayed 2022 annual report. It said this could have resulted in “misstatements” of financial results.

The shares plunge came amid wider concerns over the global banking sector, triggered by the rapid collapse of Silicon Valley Bank last week. It collapsed shortly after revealing it had a hole in its finances, caused by a drop in the value of bonds that it tried to sell to make up for a drop in its customers’ deposits.

On Thursday night, major banks intervened to prop up First Republic, a troubled mid-sized bank. Bank of America, Goldman Sachs, JP Morgan and others will deposit $30bn (£24.7bn) in First Republic, which has been hit by customers pulling out their funds since the collapse of SVB.

Credit Suisse has been trying to draw a line under multiple scandals over the past decade involving corporate espionage, tax evasion, alleged misconduct, money laundering and sanctions busting.

In the wake of these episodes, the lender’s clients have pulled out their cash, contributing to ballooning losses that grew to 7.3bn Swiss francs in 2022.

skip past newsletter promotion

Separately, it has emerged that several senior executives have left Credit Suisse’s Asia Pacific equities business. Nick Silver, a co-head of equities for Asia Pacific, is jumping ship for BNP Paribas.

Jonathan Jenkins, the head of equity sales for the region, and Chris Prasertsintanah, the head of equities for South Asia, are also leaving, according to an internal memo reported by Bloomberg.

Credit Suisse declined to comment on the lawsuit.

Source of data and images: theguardian

Related Articles

Leave a Reply

Back to top button