While Switzerland’s second-largest bank says it can create value by serving its wealthy customers with “care and entrepreneurial spirit”, the market is still not convinced and its share price is about a third in a year. Closed valuation of nearly 10 billion Swiss knock francs ($11 billion).
Meanwhile, other large European banks, buoyed by the prospect of rising interest rates, have rallied nearly 50% in stock market value over the same period and its cross-town Zurich rival UBS has left Credit Suisse in the dust.
“Credit Suisse has a long list of scandals and problems,” said Stephen Sourschel, a bond investor at Union Investments, of the bank, which was founded in 1856 and says it has 48,770 employees and 3,510 relationships worldwide. are managers.
“We always thought the management process would improve and then the next punch landed. If there were more than another billion in damage, it would be a disaster,” Sorchel said.
Things didn’t get better this week, however, when Credit Suisse reported a worse-than-expected https://www.reuters.com/business/finance/credit-suisse-posts-2-billion-swiss-franc-q4-loss -2022-02-10 warned of quarterly losses of $2.2 billion and bleak prospects for 2022, when it said earnings would be impacted by restructuring costs and payments.
That outlook further knocked out its already battered shares, a year after the bank lost 1.6 billion francs as a result of a $10 billion collapse and a $5.5 billion hit in a supply chain finance fund linked to bankrupt British finance firm Greensil. raised. The explosion of the investment fund Archegos.
Proxy consultants Athos were criticizing Credit Suisse’s decision not to publish its investigation into the Greensil case.
“The bank must restore trust with its shareholders and stakeholders by providing transparency on the root and causes of the problems,” Athos’ Vincent Kaufman said in an emailed response to Reuters.
Thomas Gottstein, who became chief executive of Credit Suisse in 2020, said after the results this week that he was confident it was well positioned to grow and that risk management was “at the core of its DNA”.
Credit Suisse declined to comment further.
Still, investors and analysts aren’t convinced, hearing about a change in the way the bank pays its top employees, with business dwindling and bleak prospects.
Andreas Venditi, an analyst at the Swiss bank Vontobel, said of Credit Suisse’s plight, “They are in a very difficult position. We have seen problems with Greensil and other matters slowing down business.”
“At the same time, banks have to pay more cash to keep their employees. While this may keep employees happy, the market doesn’t like high costs. And the outlook is weak.”
Although Credit Suisse withdrew its bonus pool, it took the unusual step of paying hundreds of millions in cash to its own bankers, while reducing the amount of shares they can offer.
The bank said senior bankers who took a high proportion of bonus deductions received 799 million Swiss francs in cash payments, up from just 59 million francs in 2020.
Skeleton
Moody’s this week voiced concerns over a reduction in money flowing into Credit Suisse, warning it could drag down revenue and pointing to pressure on money management, restructuring costs and higher payments to employees.
“We expect 2022 results to be weak,” the credit rating agency said, while analysts at Citigroup said “it was difficult to find any positives” in recent results, although they see long-term value in Credit Suisse shares.
The bank’s past is haunting it, making it difficult to repair the image that is vital to retaining wealthy customers.
Its reputation is once again being put through the mill in the first criminal trial of a major bank in Switzerland in which Credit Suisse and a former employee are accused of allowing an alleged Bulgarian cocaine smuggling gang to launder millions of euros, Suitcase stuffed in some of it
Credit Suisse has denied all allegations, while its employee denies wrongdoing.
The trial has attracted huge interest in Switzerland and more Credit Suisse representatives are due to testify, which investors are eagerly watching.
On what Credit Suisse should do now, one analyst said on condition of anonymity, “They… need to make sure they don’t have any skeletons in the closet anymore.”
“They’ve gotten themselves into a situation where you don’t give them the benefit of the doubt.”
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