Credit Suisse Short Sellers See $140 Million Gain As Shares Fall
Short sellers betting against Credit Suisse Group AG stood to reap large profits on Wednesday as the stock price tumbled the most on record.
(Bloomberg) -- Short sellers betting against Credit Suisse Group AG stood to reap large profits on Wednesday as the stock price tumbled the most on record.
The Swiss bank’s selloff created some $140 million in paper gains for those who sold borrowed shares, wagering they’d decline, according to S3 Partners data from 10 a.m. New York time. If sustained, that would bring the prospective profits for such bets against the company’s US- and Swiss-traded shares to about $192 million this year, said Ihor Dusaniwsky, S3’s head of predictive analytics.
Credit Suisse’s share price tumbled to a record low after the chair of the company’s biggest shareholder, Saudi National Bank, said it wasn’t open to injecting further cash into the bank, fueling worries about the strength of global lenders after the swift collapse of three US banks. The comments came after Credit Suisse Chief Executive Officer Ulrich Koerner had sought to shore up investor confidence by pointing to signs of improvement in its business.
The stock fell as much as 31% in Zurich for its biggest drop on record, before paring the decline to about 23%. Its US-traded American depositary receipts were down about 24% at 12:22 p.m. in New York. The moves likely trimmed some of the short sellers’ estimated profits, which were based on prices earlier in the day.
The slide fueled a broader rout in global stocks as investors rushed into havens like US Treasury bonds. Credit Suisse Chairman Axel Lehmann said Wednesday at a conference that government assistance “isn’t a topic” and that the bank’s efforts to return to profitability are not comparable to the severe liquidity issues hitting smaller US lenders.
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