Credit Suisse Gets Booked by Investors
Credit Suisse plunged 12.4%, hitting a record low, on reports that the bank is sounding out investors for fresh cash. Credit Suisse has taken pole position in a race to the bottom among big, but weak, European banks. For some time, Deutsche Bank has held the dubious title of the lowest-valued big European bank, based on price/book value. This is a ratio of a bank's share price to its net worth. When a bank is trading below one on this metric--as are Deutsche Bank, Credit Suisse and a host of other European banks--investors are signaling they think a firm's assets are overvalued, its liabilities are undervalued, it will destroy value going forward, or some combination of all three.