Tag Archives: Credit Suisse Group AG

Business

Credit Suisse CEO says outflows have reduced ‘very significantly’ as overhaul progresses

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Switzerland’s second largest bank Credit Suisse is seen here next to a Swiss flag in downtown Geneva.

Fabrice Coffrini | AFP | Getty Images

Credit Suisse is seeing a sharp reduction in client outflows, as the embattled Swiss lender progresses with its major strategic overhaul, new CEO Ulrich Koerner told CNBC on Wednesday.

The bank in November projected a $1.6 billion fourth-quarter loss after announcing a raft of measures to address persistent underperformance in its investment bank and a series of risk and compliance failures. It also revealed at the time that it had continued to experience substantial net asset outflows.

“The outflows, as we said, have reduced very significantly, and we are seeing now money coming back in different parts of the firm,” Koerner said on the sidelines of the World Economic Forum in Davos, Switzerland.

As part of the overhaul, Credit Suisse shareholders in November greenlit a $4.2 billion capital raise, including a new private share offering that will see the Saudi National Bank become the largest interest holder, with a 9.9% stake.

Koerner said the transformation towards a “new Credit Suisse” was going well.

“We laid out a very clear plan, and we talked to all different stakeholder groups in the last three months, as you would expect,” he said.

“I think the plan, the strategy resonates very much. We are in full execution swing, so I think we are making really good progress.”

Credit Suisse has also reached out to tens of thousands of clients in Switzerland and around the world for feedback, Koerner said.

“That has generated very positive momentum, and I think this is momentum that travels with us through 2023,” he added.

‘Zero concerns’ over Klein business acquisition

Koerner confirmed that the reported departure of 10% of Credit Suisse’s investment bankers in Europe was part of its previously announced plans to cut 2,700 jobs by 2023 and reduce headcount by a total 9,000 by 2025.

As part of the overhaul, Credit Suisse will spin off and rebrand its U.S. investment banking division as CS First Boston. The new unit will be headed by former Credit Suisse board member Michael Klein. Credit Suisse is reportedly on the verge of buying Klein’s boutique investment advisory firm.

Koerner insisted that he had “zero concerns” about conflicts of interest, stressing that the bank could deal with the situation “in the utmost professional way.”

“I am really looking forward for Michael to join, because Michael is an excellent banker, he is an excellent dealmaker, and he is very entrepreneurial, and that is why I want to go together with him on a journey.”

U.S. investor Harris Associates has more than halved its stake in Credit Suisse since June 2022. Koerner said he could not judge the firm for its timing, but “we will certainly have discussions.”

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Business

Wall Street layoffs pick up steam as Citigroup and Barclays cut hundreds of workers

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A trader, center, wears a Citigroup jacket while working on the floor of the New York Stock Exchange (NYSE) in New York.

Michael Nagle | Bloomberg | Getty Images

Global investment banks Citigroup and Barclays cut advisory and trading personnel this week as Wall Street grapples with sharp declines in revenue and dimming prospects for next year.

New York-based Citigroup let go of roughly 50 trading personnel this week, according to people with knowledge of the moves who declined to be identified speaking about layoffs. The firm also cut dozens of banking roles amid a slump deal-making activity, Bloomberg reported Tuesday.

London-based Barclays cut about 200 positions across its banking and trading desks this week, according to a person with knowledge of the decision.

The moves show the industry has returned to an annual ritual that’s been part of what has defined life on Wall Street: Cutting workers who are deemed to be underperformers. The practice, which had been on pause the last few years amid a boom in deals activity, returned after Goldman Sachs laid off hundreds of employees in September.

While shallow in nature, especially compared with far deeper cuts occurring in tech firms including Meta and Stripe, the moves may only be the start of a trend if capital markets remain moribund.

Equity issuance plunged 78% this year through October as the IPO market remained mostly frozen, according to SIFMA data. Debt issuance has also fallen off as the Federal Reserve boosts interest rates, slumping 30% through September.

No reprieve in 2023

In recent weeks, executives have grown pessimistic, saying that revenue from robust activity in parts of the fixed-income world has probably peaked this year, and that equities revenue will continue to decline amid a bear market in stocks.

“Most of the banks are budgeting for declines in revenue next year,” according to a person involved with providing data and analytics to the industry. “Investors know the general direction of the market, at least in the first half, and the thinking is that client demand for hedging has probably peaked.”

Among Wall Street players, beleaguered Credit Suisse is contending with the deepest cuts, thanks to pressure to overhaul its money-losing investment bank. The firm has said it is cutting 2,700 employees in the fourth quarter and aims to slash a total of 9,000 positions by 2025.

But even workers toiling at Wall Street’s winners — firms that have gained market share from European banks in recent years — aren’t immune.

Underperformers may also be at risk at JPMorgan Chase, which will use selective end-of-year cuts, attrition and smaller bonuses to rein in expenses, according to a person with knowledge of the bank’s plans.

Morgan Stanley is also examining job cuts, although the scope of a potential reduction in force hasn’t been decided, according to a person with knowledge of the company. Lists of workers who will be terminated have been drawn up in Asian banking operations, Reuters reported last week.

To be sure, managers at Barclays, JPMorgan and elsewhere say they are still hiring to fill in-demand roles and looking to upgrade positions amid the industry retrenchment.

Spokespeople for the banks declined to comment on their personnel decisions.

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Business

Q3 2022 earnings and overhaul

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Switzerland’s second largest bank Credit Suisse is seen here next to a Swiss flag in downtown Geneva.

Fabrice Coffrini | AFP | Getty Images

Credit Suisse on Thursday posted a quarterly loss that was significantly worse than analyst estimates, as it announced a massive strategic overhaul.

The embattled lender posted a third-quarter net loss of 4.034 billion Swiss francs ($4.09 billion), compared to analyst expectations for a loss of 567.93 million Swiss francs. The figure was also well below the 434 million Swiss franc profit posted for the same quarter last year.

The bank noted that the loss reflected a 3.655 billion Swiss franc impairment relating to the “reassessment of deferred tax assets as a result of the comprehensive strategic review.”

Under pressure from investors, the bank revealed a major overhaul of its business in a bid to address underperformance in its investment bank and following a raft of litigation costs that have hammered earnings.

In its widely anticipated strategic shift, Credit Suisse vowed to “radically restructure” its investment bank to significantly cut its exposure to risk-weighted assets, which are used to determine a bank’s capital requirements. It also aims to cut its cost base by 15%, or 2.5 billion Swiss francs, by 2025.

Credit Suisse expects to incur restructuring charges of 2.9 billion Swiss francs by the end of 2024.

This is a developing news story and will be updated shortly.

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Business

Credit Suisse to buy back $3 billion in debt, sell hotel as credit fears persist

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Signage hangs over the entrance of a Credit Suisse Group AG branch in Zurich, Switzerland, on Sunday, Sept. 25, 2022. Inflation in Switzerland has more than doubled since the start of the year and the State Secretariat for Economic Affairs expects it to come in at a three-decade-high of 3% for 2022. Photographer: Pascal Mora/Bloomberg via Getty Images

Bloomberg | Bloomberg | Getty Images

Troubled bank Credit Suisse offered to buy back up to 3 billion Swiss francs ($3.03 billion) of debt securities Friday, as it navigates a plunging share price and a rise in bets against its debt.

The Swiss lender also confirmed that it is selling its famous Savoy Hotel in Zurich’s financial district, prompting some speculation that it is scrambling for liquidity.

In a statement Friday regarding the offer to repurchase debt securities, Credit Suisse said: “The transactions are consistent with our proactive approach to managing our overall liability composition and optimizing interest expense and allow us to take advantage of market conditions to repurchase debt at attractive prices.”

It comes after Credit Suisse’s shares briefly hit an all-time low earlier this week, and credit default swaps hit a record high, amid market’s skittishness over its future.

The embattled lender is embarking on a massive strategic review under a new CEO after a string of scandals and risk management failures, and will give a progress update alongside its quarterly earnings on Oct. 27.

The most costly of the scandals was the bank’s $5 billion exposure to hedge fund Archegos, which collapsed in March 2021. Credit Suisse has since overhauled its management team, suspended share buybacks and cut its dividend as it looks to shore up its future.

Shares closed at 4.22 Swiss francs on Thursday. They are down over 50% year to date.

On Friday, the bank announced a cash tender offer relating to eight euro or sterling-denominated senior debt securities, worth up to 1 billion euros ($980 million), along with 12 U.S. dollar-denominated securities worth up to $2 billion. The offers on the debt securities will expire by Nov. 3 and Nov. 10, respectively.

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Business

Credit Suisse is under pressure, but short sellers appear to be eyeing another global bank

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Business

Credit Suisse is not about to cause a Lehman moment, economist Sri-Kumar says

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Worries are mounting over Credit Suisse’s financial health — but that doesn’t mean markets are headed toward a “Lehman moment,” said the president of Sri-Kumar Global Strategies.

“I think the Federal Reserve is going to have to face the consequences of a credit event” if it were to occur, Komal Sri-Kumar told CNBC’s “Squawk Box Asia” on Monday. “Something is going to break.”

“This may or may not be a Lehman moment,” he said, referring to the collapse of Lehman Brothers in 2008, which triggered a string of big Wall Street bailouts and a subsequent financial crisis.

Over the weekend, several media outlets reported that Credit Suisse sought to assuage investors’ concerns over its financial health — the Swiss bank reportedly contacted its biggest clients after its credit default swaps rose sharply.

CDSs are essentially insurance bets against defaults and a credit event refers to a negative and sudden change in the borrower’s ability to repay its debt.

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A long-time critic of the Fed’s approach to the rise of prices, Sri-Kumar said the latest events surrounding Credit Suisse shows the “real danger of having miscalculated inflation for such a long time.”

“They are trying to make up for it by doing everything in a hurry,” he said, referring to the Fed’s continued hawkish policy and pledge to continue hiking interest rates to tamp down on inflation.

In the Fed’s latest monetary policy meeting in September, the central bank raised its benchmark rate by three-quarters of a percentage point and indicated it will keep raising rates well above the current level.

Sri-Kumar said such attempts at controlling inflation is dangerous for markets worldwide.

“It carries an enormous amount of risk to the global system in terms of what the various central banks are doing,” he said.

The latest reports of Credit Suisse’s actions to calm concerned investors could point to an eventual shift in the Fed’s direction, said John Vail, chief global strategist at Nikko Asset Management.

“The silver lining at end of this period, is the fact that central banks will probably start to relent some time as both inflation is down and financial conditions worsen dramatically,” he said on CNBC’s “Squawk Box Asia” Monday.

“I don’t think it’s the end of the world, but it could get scary for the next quarter or so,” he said.

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Business

European stocks, markets, earnings, data and news

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Stocks on the move: Credit Suisse down 9%, Accelleron down 12% on debut

Credit Suisse shares plunged 9% on Monday as market jitters over the Swiss bank’s capital position persist after a spike in credit-default swaps.

Reuters reported on Friday that Credit Suisse CEO Ulrich Koerner told staff in an internal memo that capital and liquidity were solid.

Credit Suisse is due to announce the outcome of its strategic review on Oct. 27.

At the bottom of the Stoxx 600, Accelleron sank more than 12% on its market debut on the SIX Swiss Exchange in Zurich, after the former ABB turbocharging unit was spun off by the Swiss automation company.

British pound jumps on reports UK government will U-turn on cut to top tax rate

The British pound jumped on Monday morning on reports that the U.K. government will reverse plans to scrap the top rate of income tax.

Sterling gained 0.8% against the dollar to trade at around $1.1250 shortly after 7 a.m. London time, taking the pound back to the level seen before Finance Minister Kwasi Kwarteng’s announcement of a raft of widely criticized tax cuts on Sept. 23.

ANZ sees significant chance of an OPEC+ cut as large as 1 million barrels per day

Ahead of an OPEC+ meeting on Oct. 5, ANZ sees a “significant chance of a cut” as large as 1 million barrels per day, analysts at the firm said in a note.

That move is likely to be made “to counteract the excessive bearishness in the market.”

The note added that any production cuts below 500,000 barrels per day, however, would be “shrugged off by the market.”

–Jihye Lee

CNBC Pro: Investment pro says ETFs are a $10 trillion opportunity — and reveals areas of ‘tremendous’ value

Exchange-traded funds offer the benefit of diversification, says Jon Maier, chief investment officer at Global X ETFs. He said the ETF market is “growing exponentially” and estimates it to be worth $10 trillion.

He names several opportunities for ETF investors in this volatile market.

Pro subscribers can read more here.

— Zavier Ong

Oil prices jump on reports of OPEC+ mulling production cut

CNBC Pro: The five global stocks experiencing the de-globalisation trend, according to HSBC

New research from HSBC says supply chains, geopolitical tensions, and worsening financial conditions have forced many global companies to “substantially” turn inward in search of resilient revenue and growth.

In a tough economic environment with recessionary pressures, the bank said turning inwards is “probably helpful” for these stocks.

The report titled ‘A de-globalisation wave?’ said European firms’ foreign sales dipped below 50% in 2021, the lowest level in the last five years.

European markets: Here are the opening calls

European stocks are expected to open in negative territory on Wednesday as investors react to the latest U.S. inflation data.

The U.K.’s FTSE index is expected to open 47 points lower at 7,341, Germany’s DAX 86 points lower at 13,106, France’s CAC 40 down 28 points and Italy’s FTSE MIB 132 points lower at 22,010, according to data from IG.

Global markets have pulled back following a higher-than-expected U.S. consumer price index report for August which showed prices rose by 0.1% for the month and 8.3% annually in August, the Bureau of Labor Statistics reported Tuesday, defying economist expectations that headline inflation would fall 0.1% month-on-month.

Core CPI, which excludes volatile food and energy costs, climbed 0.6% from July and 6.3% from August 2021.

U.K. inflation figures for August are due and euro zone industrial production for July will be published.

— Holly Ellyatt

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Business

Credit Suisse seeking to assure investors amid financial concerns: FT

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A Swiss flag flies over a sign of Credit Suisse in Bern, Switzerland

FABRICE COFFRINI | AFP | Getty Images

Credit Suisse executives are in talks with the bank’s major investors to reassure them amid rising concerns over the Swiss lender’s financial health, the Financial Times reported, citing people involved in the discussions.

One executive involved in the talks told the Financial Times that teams at the bank were actively engaging with its top clients and counterparties over the weekend, adding that they were receiving “messages of support” from top investors.

Shares of Credit Suisse touched fresh lows last week. The stock is down about 55% year-to-date.

Spreads of the bank’s credit default swaps (CDS), which provide investors with protection against financial risks such as default, rose sharply Friday. They followed reports the Swiss lender is looking to raise capital, citing a memo from its Chief Executive Ulrich Koerner.

FT said the executive denied reports that the Swiss bank had formally approached its investors about possibly raising more capital, and insisted Credit Suisse “was trying to avoid such a move with its share price at record lows and higher borrowing costs due to rating downgrades.”

The bank told Reuters that it’s in the process of a strategy review that includes potential divestitures and asset sales, and that an announcement is expected on Oct. 27, when the bank releases its third-quarter results.

Credit Suisse has also been in talks with investors to raise capital with various scenarios in mind, Reuters said, citing people familiar with the matter as saying it includes a chance that the bank may “largely” exit the U.S. market.

The latest from Credit Suisse signals a “rocky period” ahead but it could lead to a change in the U.S. Federal Reserve’s direction, said John Vail, chief global strategist at Nikko Asset Management, on CNBC’s “Squawk Box Asia” on Monday.

“The silver lining at end of this period is the fact that central banks will probably start to relent some time as both inflation is down and financial conditions worsen dramatically,” Vail said. “I don’t think it’s the end of the world.”

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“We struggle to see something systemic,” analysts at Citi said a report about the possible “contagion impact” on U.S. banks by “a large European bank.” The analysts did not name Credit Suisse.

“We understand the nature of the concerns, but the current situation is night and day from 2007 as the balance sheets are fundamentally different in terms of capital and liquidity,” the report said, referring to the financial crisis that unraveled in 2007.

“We believe the U.S. bank stocks are very attractive here,” the report said.

Read the full Financial Times report here.

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Business

European stocks slide 2.8% after weak euro zone data, new UK economic plan

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European stocks were sharply lower on Friday, as investors digested a raft of central bank decisions and a new economic plan from the U.K.

The Stoxx 600 was down 2.8% in early afternoon trading, with all sectors and major bourses trading in the red.

Oil and gas stocks and basic resources were the biggest fallers, both down more than 4%.

Thursday’s market moves come after the U.K. government announced a raft of tax cuts as the country prepares for a recession. Sterling was down 1.8% against the dollar around midday to trade at $1.1048 following the news.

The Bank of England also hiked rates by 50 basis points Thursday — its seventh consecutive increase — and said it believed the U.K. economy was already in a recession.

Also Thursday, the Swiss National Bank hiked its benchmark rate to 0.5%, a shift that brings an end to an era of negative rates in Europe.

The U.S. Federal Reserve, meanwhile, hiked by another three-quarters of a percentage point Wednesday, and indicated that the hikes will keep on coming.

U.S. stocks closed lower Thursday, their third consecutive daily decline, and futures were also lower on Friday.

Asia markets, meanwhile, were in the red, with Australian stocks down 2%.

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Business

Fed hike fears, Jackson Hole in focus

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London Stock Exchange

Toby Melville | Reuters

LONDON — European markets retreated slightly on Monday as fears of more aggressive interest rate hikes from the Federal Reserve returned to the fore.

The pan-European Stoxx 600 slipped 0.3% in early trade, with autos falling 0.8% to lead losses while health care stocks added 0.4%.

Shares in Asia-Pacific were mixed on Monday as caution prevailed, though Chinese markets rose after China’s central bank cut its benchmark lending rates.

U.S. stock futures fell in early premarket trade after the S&P 500 snapped a four-week winning streak on Friday, as Wall Street looks ahead to Fed Chairman Jerome Powell’s Friday comments on inflation at the central bank’s annual Jackson Hole economic symposium.

“We expect the market to approach the Fed’s Jackson Hole meeting fearing a hawkish message that could drive a sharp risk-off move. However, we think the message will be more nuanced, and possibly even reassuring,” said Steve Englander, head of global FX research and North America macro strategy at Standard Chartered.

“For the Fed, getting inflation down towards targets is non-negotiable. Chair Powell is likely to state that the Fed will raise rates as far as it takes, and for as long as it takes, to lower inflation.”

There are no major corporate earnings or economic data releases due out of Europe on Monday.

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