Credit Suisse Shores Up Cash

Credit Suisse’s share price has been halved since the start of the year amida series of high-profile scandals.

Swiss bank Credit Suisse is under pressure to plug an estimated $9 billion black hole—after losing billions of dollars in 2021—amid scrutiny from shareholders, lawmakers and the Swiss regulator. The bulge-bracket bank has battled a series of high-profile scandals, including its involvement with disgraced UK lender Greensill Capital and collapsed US hedge fund Archegos Capital. Credit Suisse’s share price has halved since the start of the year. The cost of insuring against its bonds rocketed to historic highs in the first week of October amid concerns about how the lender would restructure its business.

Credit Suisse’s chairman, Axel Lehmann, has vowed to reform the bank. He told an audience at an event organized by the Institute of International Finance, “We had last year a horrible year. We had the biggest loss in the 166 years of the company. We are fully aware that we need to change and will change.” The bank had to fork out around half a billion dollars to settle litigation over disputed mortgage-backed securities in the US. Global regulators also fined it approximately another half a billion dollars over a bribery scandal in Mozambique.

The bank is now selling off its assets around the world to shore up cash in a bid to stave off concerned investors and appease its primary regulator, the Swiss Financial Market Supervisory Authority (Finma). Finma has its eye on Credit Suisse after finding “serious organizational shortcomings” in an investigation into spying at the bank’s highest levels.

Switzerland’s second-largest bank has agreed to sell its 8.6% stake in fund-distribution platform Allfunds Group for €334 million ($330 million) and its 30% stake in an energy-investment firm, Energy Infrastructure Partners, for an undisclosed sum. It is expected to shrink its volatile investment banking operations in London and New York to focus on managing private wealth in Switzerland. Wealth managers and private-equity firms in the US are eyeing the bank’s US asset management arm. It even put its famed Savoy hotel in Zurich on the market, which could net it as much as 400 million Swiss francs (nearly $400 million).