Credit Suisse, if the “stew” becomes the recipe for getting out of the long crisis and scandals – Corriere.it

uA well-known Milanese manager, accustomed to navigating the financial statements of listed financial companies, confided to us a year ago: I invested personally on the Credit Suisse stock: it can’t go any lower now. At the time, the Swiss bank’s shares traded on the Zurich Stock Exchange above nine Swiss francs. Last week it came in at 2,734. In between there is also a capital increase of 4 billion, which the Stock Exchange practically burned. proof that the worst never ends.

Credit Suisse is one of the big black holes in recent global financial news. A bank imbued with the Swiss spirit. It was founded in 1856 by Alfred Escher, one of the fathers of the confederation. In fact, Escher was responsible for the very idea of ​​the Swiss railway network, the birth of the Federal Polytechnic, the Gotthard railway, Swiss Life insurance and, precisely, that of the Schweizerische Kreditanstalt, today’s Credit Suisse. Much more than a bank, an element of identity for the citizens of the confederation, who today are overwhelmed by a series of misadventures that began with the Archegos scandal, costing over 5 billion dollars and which continued, at least, until last week, when it emerged that a former employee of the group stole sensitive data relating to the bank years ago.

Change at the top

One scandal after another has hit Credit Suisse, so much so that there is almost no basis for comparison. Some think of Deutsche Bank, others of Monte dei Paschi di Siena. In truth, Credit Suisse is not comparable to either one or the other, a unique between some excellences, several scandals and many errors in risk assessment.

Three managing directors and two presidents have changed in three years in a feverish alternation that seeks to represent the two souls of the group: the prudently Swiss one and the more unscrupulous American one, in compliance with the acquisition of First Boston, the New York investment bank which the Swiss bought in 1988 and merged internally in 2006. Today the turn of the Swiss managers: Ulrich Krner since last July the new managing director, Axel Lehmann, since 2022, the president. a moment of great caution. The Swiss soul of the group tries to keep everything together and start again. But not easy.

The mandate of Tidjane Thiam, the Ivorian-French banker who led the group from 2015 to 2020 represents a turning point in recent history. In February three years ago Thiam was forced to resign from his post ceo for an espionage affair against the former head of asset management, Iqbal Khan, and the former head of human resources, Peter Goerke. In his place was appointed Thomas Gottstein, who the following year was overwhelmed by crack of the family office American Archegos, which also cost the group a hole in the balance sheet of 900 million Swiss francs in the first quarter of 2021. It was not the last mishap. President Antonio Horta-Osrio repeatedly broke the anti-Covid rules and was forced to resign, while the Australian fund Greenshill Capital cost over 300 million in provisions. Gambles, speculation, underestimation of risks: in the last year they cost 65 percent of the capitalization. The tonnage of the group should also be considered which, given the global scope, is of medium size. On the stock exchange in Zurich, Credit Suisse is worth 11.5 billion francs. The domestic competitor, Ubs, exceeds 70 billion. Size matters. This is well understood with the Archegos affair. A loss of 4.4 billion francs in the severe global finance business considered To themost a normal event in investmind banking, almost a regular occurrence in investment banking. But if the group that suffers the loss is worth less than 20 billion on the stock exchange, 25 percent of its capitalization becomes a very high price to pay.

Choices

It’s not just scandals and balance sheet losses that are driving Credit Suisse into a corner. Even some managerial choices have created perplexity. Like when it was decided to buy his investment boutique from Michael Klein for 175 million francs. Klein, head of Credit Suisse’s US operations, one of the stars in the management banking. His exit from Citi in 2008, with a payouts of 42 million dollars, made him The most highly paid banker in the world.

Now, the customer confidence crisis, which led to the loss of 93 billion assets under management in the last quarter of 2022, 15 percent of the total must be fought with facts. What might be the solution hard to say. One of the possible so-called stewi.e. a separation of activities. On the one hand, the commercial banking business is resident in Switzerland, where Credit Suisse shares about 90% of the market with its competitor Ubs. On the other the Corporate and investment banking and the wealth management. In this perspective one can hypothesize one split equity with the establishment of new companies in which the Swiss component remains present, but alongside international private investors.

In Italy the brand still has a high attractiveness. The presence at the top of the Italian pyramid of Federico Imbert, Guido Banti, Michele Pangrazzi and Paolo Celesia guarantees an excellent level of competence and professionalism. So much so that Credit Suisse has been present in all the most recent transactions, from the De Nora IPO, to the increase in MPS, from closing Dufry-Autogrill to the activities of advisory for Cdp on the Tim dossier. As well as inasset managementled by Emanuele Bellingeri or in private banking where the group is led globally by the Italian Francesco de Ferrari, while Gabriele D’Agosta is responsible for the activities in the Peninsula.

The strength of brandthe high level of liquidity, capital solidity beyond the limits required by the regulators (14.1% Cet1 ratio) play in favor of keeping the group. The management recently announced 9,000 job cuts globally, but more likely to happen, be it one stew or end up in a bigger group. In recent months, the Credit Suisse dossier has been proposed to many. In Italy, both Unicredit and Intesa Sanpaolo have evaluated the opportunity to buy, but nothing has been done. The Arab financial operators were more decisive, with the Saudi national bank which in December 2022 acquired 9.88 percent of the capital. At the beginning of February it was the turn of BlackRock funds, which reached 4.07 percent of the shares. Here, the interest of big finance is an act of faith in the future. It is true that at such low prices, opportunities are never lost, but perhaps the time has come for Credit Suisse to look ahead.

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