{"id":1670962,"date":"2022-10-04T00:50:11","date_gmt":"2022-10-04T04:50:11","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1670962"},"modified":"2022-10-04T00:50:48","modified_gmt":"2022-10-04T04:50:48","slug":"analysis-credit-suisses-turnaround-just-got-a-lot-tougher-as-market-reels","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/analysis-credit-suisses-turnaround-just-got-a-lot-tougher-as-market-reels\/","title":{"rendered":"Analysis-Credit Suisse\u2019s turnaround just got a lot tougher as market reels"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">22<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fanalysis-credit-suisses-turnaround-just-got-a-lot-tougher-as-market-reels%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=1670962&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>By Oliver Hirt and Carolina Mandl<\/p>\n<p>ZURICH\/NEW YORK (Reuters) \u2013     Swiss lender Credit Suisse Group AG, battered by scandals and losses, is racing through a restructuring plan. Wild market swings and a social media storm are making that task increasingly difficult.<\/p>\n<div id=\"div-gpt-ad-1663871513696-art-1\">\n<\/div>\n<p>Some of the bank\u2019s wealth management clients have recently become concerned about Credit Suisse\u2019s turnaround, two people familiar with the discussions told Reuters, and some have been moving funds, according to one of the people. The division is expected to be the centerpiece of the bank\u2019s turnaround plan.<\/p>\n<p>A Credit Suisse spokesperson said: \u201cWe remain close to our clients as we conduct our strategic review.\u201d<\/p>\n<p>Meanwhile, the firm\u2019s ability to extract good terms from potential buyers of businesses it wants to exit has been weakened by the market rout, analysts say. <\/p>\n<p>Concerns in recent weeks that Credit Suisse will not be able to fund the reorganization without tapping investors for funds pushed the stock to new record lows.<\/p>\n<p>Unsubstantiated social media speculation about the bank\u2019s solidity over the weekend triggered a slump in its bonds while the cost of insuring against a Credit Suisse default jumped on Monday to a level not seen in decades.<\/p>\n<p>\u201cIt\u2019s always going to be a challenging restructuring,\u201d said Johann Scholtz, equity analyst at Morningstar. \u201cBut what makes it even harder now is that you increased funding costs dramatically and profitability, which was already under pressure, is now even further under pressure.\u201d<\/p>\n<p>Graphic: Credit Suisse valuation Credit Suisse valuation https:\/\/graphics.reuters.com\/CREDITSUISSEGP-SHARES\/xmvjoznynpr\/chart.png<\/p>\n<p>Under CEO Ulrich Koerner, in the job since July, Credit Suisse is attempting to restore the bank\u2019s profitability and reputation. It lost $5 billion when Archegos collapsed in 2021, was rebuked by regulators for spying on executives and was tarnished by its involvement with defunct financier Greensill Capital.<\/p>\n<p>To underpin sustainable profit, Credit Suisse is aiming to streamline the investment bank and expand its wealth management business, which soaks up less capital.\u00a0Amid the options the bank has said it is considering is finding a buyer for its securitized products business. <\/p>\n<p>The more it can fetch for its assets, the less it will have to raise from investors. <\/p>\n<p>A source familiar with the situation told Reuters on Friday that the bank was exploring all options to get additional capital and that it did not necessarily have to sell more shares. There was a way for it to do so with just asset sales, the source said.<\/p>\n<p>Credit Suisse will still have an investment bank but it is likely the division would be trimmed, the source added. <\/p>\n<p>The bank has said it will present its plan on Oct. 27, but upheaval in the bank\u2019s stocks and bonds could complicate that task considerably.<\/p>\n<p>\u201cThe executives really need to jump on this to inform investors and the general public very specifically about what they\u2019re going to do about a restructuring,\u201d said Mayra Rodr\u00edguez Valladares, a financial risk consultant who trains bankers and regulators.<\/p>\n<p>Graphic: Soaring cost of insuring Credit Suisse debt https:\/\/graphics.reuters.com\/CREDITSUISSEGP-BONDS\/jnvweqarovw\/chart.png<\/p>\n<p>Credit Suisse\u2019s shares have fallen some 60% this year. The cost to insure its bonds also soared again on Monday, adding 105 basis points from Friday\u2019s close to trade at 355 bps, their highest level in at least more than two decades. <\/p>\n<p>Adding to its woes is broader market malaise, with rapidly rising interest rates and recession fears as well as the fallout of the war in Ukraine rattling investors and tightening financial conditions. <\/p>\n<p>\u201cThe issue Credit Suisse runs into is that it almost becomes a self-fulfilling prophecy, not so much from a liquidity perspective, but their star talents start to leave or the rich people start pulling their money out of the private bank and then the business fundamentals begin to decline,\u201d said James Finch, clinical associate professor of finance at New York University Stern School of Business. <\/p>\n<p>\u2018FORCED SELLER\u2019<\/p>\n<p>Jefferies analysts wrote in a note that Credit Suisse would be a \u201cforced seller,\u201d which could hurt the price it fetches for assets. <\/p>\n<p>\u201cSelling assets will generate capital but reduce future earnings generation capacity,\u201d the analysts wrote. \u201cOverall, we think asset sales alone are unlikely to be the solution to the potential capital shortfall problem.\u201d<\/p>\n<p>There are also concerns of possible further outflows from the private banking business, analysts at Citigroup wrote in a note to clients on Monday. <\/p>\n<p>Regulators have been watching. A source familiar with the matter said Swiss regulator FINMA and the Bank of England in London, where the lender has a major hub, were monitoring the situation and working closely together.<\/p>\n<p>Executives have reassured staff that the bank has solid capital and liquidity. <\/p>\n<p>Three sources at rival Wall Street firms affirmed that view and pushed back against any comparisons with the industry during the 2008 financial crisis, when banks such as Lehman Brothers failed.   <\/p>\n<p>In his note, Beaumont pointed to various measures of Credit Suisse\u2019s capital levels, saying it seemed to be \u201csufficient to absorb upcoming losses from divestments\/asset sales.\u201d <\/p>\n<p>It would behoove the bank to explain that it has sufficient capital to handle any unexpected losses, as well as adequate liquidity and cash to pay its obligations, said Rodriguez Valladares. <\/p>\n<p>\u201cWhat makes me a bit nervous is that some investors are jumping too quickly,\u201d said Rodriguez Valladares. \u201cLook, the capital levels and the liquidity levels of credit Suisse are still healthy.\u201d<\/p>\n<p> (Reporting by Oliver Hirt in Zurich and Carolina Mandl in New York; Additional reporting by Lananh Nguyen, Davide Barbuscia, Megan Davies and Greg Roumeliotis in New York; Writing by Elisa Martinuzzi and Paritosh Bansal; Editing by Matthew Lewis)<\/p>\n<p><a href=\"https:\/\/www.oann.com\/uncategorized\/analysis-credit-suisses-turnaround-just\/attachment\/file-photo-logo-of-swiss-bank-credit-suisse-is-seen-12\/\"><img decoding=\"async\" src=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-content\/uploads\/2022\/10\/tagreuters.com2022binary_LYNXMPEI93070-BASEIMAGE.jpg\" alt=\"tagreuters.com2022binary_LYNXMPEI93070-BASEIMAGE\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Oliver Hirt and Carolina Mandl ZURICH\/NEW YORK (Reuters) \u2013 Swiss lender Credit Suisse Group AG, battered by scandals and losses, is racing through a restructuring plan. Wild market swings<\/p>\n","protected":false},"author":66,"featured_media":2315279,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[],"class_list":["post-1670962","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry"],"_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1670962","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/66"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=1670962"}],"version-history":[{"count":0,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/1670962\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2315279"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=1670962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=1670962"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=1670962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}