Scandal-Hit Credit Suisse Ponders Over an Overhaul

Credit Suisse

The bank’s executives worry the flagship Swiss lender, left exposed by scandals, could be confronted. Investors are demanding its break-up, or that its shrinking stock-market value makes it a spot for a foreign hostile takeover, those people stated.

New chairman Antonio Horta-Osorio published a strategic review in late April. He told investors he would need time in reaching hard decisions that rested ahead.

The bank’s senior management is to convene next week, one source stated. In opposition, another person who understood the matter said top executives needed to examine restructuring proposals in early July.

The Swiss bank has had to evaluate its business after losing more than US$5 billion (S$6.7 billion) in a hurry to unwind trades by family office Archegos.

It also meets a barrage of legal action for assisting clients in investing US$10 billion in bonds issued by fallen supply chain finance firm Greensill Capital.

The bank’s shares fell by more than a quarter after early March when it had problems with Greensill.

Some executives have discussed steps such as spinning off its local Swiss bank to serve the rest of the business for a merger, cutting back investment banking, or selling its asset management business, two of the people responded.

A third said selling the US investment bank was also an opportunity.

Management discussions on any restructuring are introductory. They are in full motion. However, they don’t have any decisions yet.


Credit Suisse and UBS Declined to Comment


In April, Swiss supervisor Finma stated it had started enforcement proceedings versus Credit Suisse. This is following the Archegos failure and investigated risk management weaknesses.

Swiss regulators don’t like what they perceive as the bank’s freewheeling culture.

Credit Suisse’s contracted market valuation makes it meriting a fraction of some of the big Wall Street banks. Those can also be possible suitors.

However, any US takeover would not be well accepted in Switzerland. Relations between Swiss banks and Washington took a hit when the United States urged them into giving up their strict secrecy code more than a decade ago.

An alliance with UBS would be more palatable, the people stated.

But a consolidated Credit Suisse-UBS would have a dominant position in the Swiss market, a matter for regulators who could also demand that a merged group support its capital.

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