Credit Suisse is under pressure, but short sellers appear to be eyeing another global bank
Josue Tavorn October 4, 2022 0Investor anxiety over Credit Suisse has sent its shares tumbling over recent days , but short sellers appear to be eyeing another European bank, data shows. Paris-headquartered BNP Paribas was the most shorted European banking stock as of Monday, with a total of $1.68 billion in bets against the bank’s shares, according to data from S3 Partners. Short-sellers profit when stocks fall. They borrow shares to immediately sell them and plan to buy them back when the price is lower, making a profit from the difference. More than 3.66% of traded shares in BNP Paribas were used to short it — the highest percentage among 17 banks for which data is available, according to the data analytics firm S3. While shares in the French bank have already fallen by 28% this year, most analysts still have a buy rating on BNP Paribas, according to FactSet, with analysts giving the stock an average upside of 52%. Meanwhile, Credit Suisse was the eighth-most shorted European bank, with 2.42% of its floated shares used to bet against it. Shares in the bank pared losses after plunging as much as 10% on Monday. Over the year to date, Credit Suisse shares are down over 55%. The Financial Times reported Monday that the Swiss bank’s executives were in talks with its major investors to reassure them amid rising concerns over the lender’s financial health. In a statement on Monday, Credit Suisse told CNBC that it will provide an update on its strategy review when the bank releases its third-quarter results on Oct. 27. “It would be premature to comment on any potential outcomes before then,” it said. In a separate memo obtained by CNBC, Credit Suisse’s CEO urged people not to confuse “our day-to-day stock price performance with the strong capital base and liquidity position of the bank.” Data shows that the Swiss bank had the second-largest increase in short-selling activity in September, with $167 million being bet against the shares. “With its recent market volatility we should see continue short selling in the stock as traders look to increase their exposure,” a research note from S3 Partners said. Italian investment bank Mediobanca and Germany’s Commerzbank were the second and third most shorted stocks, respectively, according to S3.