The chief executive of Credit Suisse has said the sell-off in banking shares in unjustified, as he seeks to shore up confidence in his company and the wider sector after fears about lenders’ financial strength cause heavy share price falls across Europe.
Tidjane Thiam said Credit Suisse was “stronger than ever”, after the bank’s shares dropped 8% on Tuesday, taking its fall since this year to 40%.
The former boss of Prudential, who took over at Credit Suisse in July, said his bank’s balance sheet was stronger than it had ever been and that it had no trouble raising funding in the market. Banks in general are safer than during the financial crisis, he added.
Shares of banks in Europe, the US and Japan have plunged due to a wide range of concerns including fears of a global recession, the impact on profits of low or negative interest rates and worries about balance sheet strength.
Some analysts have compared the panic to the period before Lehman Brothers went bust in September 2008 but Thiam said the comparison was not valid.
“The banking system in general is much stronger than in 2008, 2009 [but] there are a lot of memories of that period,” Thiam told the Financial Times (£). “Some of the scenes we are seeing today are not justified . . . Banks are smaller, they are deleveraged, they are less risky, they are better capitalised.”
Thiam is the second major European bank boss to speak out this week after John Cryan, Deutsche Bank’s chief executive, was forced to reassure his employees that Germany’s biggest bank was “rock solid”. Deutsche has tried to reassure investors that it will be able to make payments on bonds that convert into shares at times of crisis.
Credit Suisse, Switzerland’s second-biggest bank, has also been in the line of fire. Its shares fell more heavily than Deutsche’s on Tuesday. Last week Credit Suisse posted its first annual loss since 2008 as it wrote down the value of its investment bank.
Thiam said Credit Suisse could answer questions about the strength of its balance sheet and that traders in bank shares were reacting to short-term events.
Credit Suisse shares rose 3% in early trading on Wednesday as the Europe-wide Stoxx 600 banking index gained 3.7%.
The sector was supported by a report in the FT that Deutsche is considering buying back billions of euros of its own debt in an effort to support the falling value of its bonds. Deutsche shares jumped more than 11% on Wednesday morning.
This article was written by Sean Farrell, for theguardian.com on Wednesday 10th February 2016 10.03 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010