Archegos-Greensill: Credit Suisse Has Some Painful Choices to Make – About Your Online Magazine


In the board.

Photographer: Michele Limina / Bloomberg

Credit Suisse Group AG is experiencing serious financial problems after stepping on several rakes at once. He must be able to handle it, but he cannot afford to put the wrong foot. The Swiss bank’s global wealth business is its most valuable asset and there is a danger that its reputation – especially among customers in Asia and the Middle East – will be contaminated by the lender’s regrettable risk management, revealed by its exposure to the month’s explosions past of Greensill Capital and Archegos.

A new leadership is on the way with Antonio Horta-Osorio taking over as president soon. Just as importantly, the experienced former Bank of America executive, Christian Meissner, is preparing to take control of the struggling investment bank. CEO Thomas Gottstein has survived so far because he is relatively new to the job, but it was the worst start to his reign possible. In a conference call on Tuesday, the CEO pointed to Horta-Osorio’s arrival as a chance to reevaluate the bank’s strategy, according to Bloomberg News.

Read more: Credit Suisse CEO faces anger in the ranks of Archegos Mess

With a series of company-wide layoffs following the Archegos and Greensill accidents, nearly a whole cadre of senior bankers has been removed. The immediate need is for strong leadership to secure the ship and maintain the best performances during a dark time for the company. A pre-tax loss of 900 million Swiss francs ($ 960 million) in the first quarter, a two-third cut in dividends and a suspension of share repurchases are bad enough. The real risk to staff retention is that the bonus pool will have to be reduced significantly.

To strengthen employee and shareholder confidence, Credit Suisse must allay its problems and make a statement of intent about what it will look like in the future. Although having to write off $ 4.4 billion is calamitous, the lender would have made a decent start to the year otherwise. Its core equity tier-one ratio is still 12%, according to the company, and a liquidity coverage ratio above 200% means that it is fundamentally solid.

Paula Fonseca