Credit Suisse Group AG, a Swiss institution that has suffered losses and controversies, is working quickly on a recovery plan. That effort is becoming more and more challenging due to volatile market fluctuations and social media uproar.
According to one of the persons, some of the bank’s wealth management clients have recently started to express anxiety over Credit Suisse’s recovery, according to two people involved with the discussions who spoke to Reuters. Also, the division will likely serve as the focal point of the bank’s turnaround strategy.
“We stay connected to our clients as we perform our strategic assessment,” a Credit Suisse representative said.
Meanwhile, analysts claim that the market crash has made it harder for the company to get favorable terms from prospective buyers of the firms it wants to sell.
Moreover, the stock has hit fresh record lows due to worries that Credit Suisse won’t be able to finance the reorganization without asking investors for money.
Unfounded social media rumors about the bank’s viability over the weekend caused its bonds to decline, and on Monday, the premium of insurance against a Credit Suisse default increased to a level not seen in decades.
It will always be a difficult restructuring, according to Morningstar equities analyst Johann Scholtz.
Ulrich Koerner, CEO of Credit Suisse since July, is working to rebuild the bank’s profitability and image.
It suffered a $5 billion loss when Archegos failed in 2021, received criticism from regulators for eavesdropping on executives, and had its reputation damaged by its association with bankrupt financier Greensill Capital.
However, Credit Suisse wants to increase its wealth management division, which requires less capital, and restructure the investment bank to support sustainable profit.
Meanwhile, finding a buyer for the bank’s securitized products business is one of the alternatives the institution has stated it is examining.
Less money will need to be raised from investors if it can sell its assets for more.
Credit Suisse would be a “forced seller,” according to analysts at Jefferies, which might lower the price it receives for assets.
Additionally, there are worries about potential future withdrawals from the private banking sector, Citigroup analysts said in a note to clients on Monday.
