Credit Suisse fighting for its survival - New York News
by IANS | Updated Oct 02, 2022
The second Swiss bank and one of the largest banks in the world is in deep trouble and is currently fighting for its survival. A negative outcome is likely to cause a shock similar to that caused by the bankruptcy of the US bank Lehman Brothers in September 2008. This event triggered one of the most serious financial and economic crises since the Great Depression.
A year ago, Credit Suisse had a market capitalisation of $22.3 billion. Today, its market value is only $10.4 billion. Credit Suisse shares fell 56.2 per cent in one year to $3.98, The Street reported.
It is a real nightmare for the bank which had succeeded in weathering the financial crisis without losing too many feathers. At the time of this crisis, Credit Suisse shares had certainly fallen but they were down only to the level of $45, which seemed to be a feat for a bank at the time.
In recent days, employee morale has been gloomy. The bank has not yet renewed the contracts of certain contractors. Departures are no longer really replaced, TheStreet has learned.
The talent is leaving. The bank has just lost one of its senior dealmakers, Jens Welter, who left to join Citigroup after 27 years with the establishment. Welter was global co-head of banking when he left. Another departure is head of global credit products Daniel McCarthy.
"I am conscious that there is lots of uncertainty and speculation both outside and within the company," Chief Executive Officer Ulrich Korner told employees in a memo on September 30. "While you will appreciate that I am unable to share details of our transformation plans before October 27, I also want to make sure that you hear from me directly during this challenging period. I will therefore be sending a regular update to you all until then."
In this memo seen by TheStreet, the CEO explained that "this is a critical moment" for the bank and warned employees that the rumors and speculations will continue and will become even louder.
He assured them that the stock price does not reflect the financial health of the firm.
"I trust that you are not confusing our day-to-day stock price performance with the strong capital base and liquidity position of the bank," he said.
"We are in the process of reshaping Credit Suisse for a long-term, sustainable future - with significant potential for value creation," Korner added. "I am confident we have what it takes to succeed."
The mistakes of the investment bank have plunged Credit Suisse into numerous successive scandals in recent years, reviving speculation about its bankruptcy or its merger with its rival UBS, The Street reported.
October 02, 2022 Other New York
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