Business

Credit Suisse needs to salvage reputation after chairman resigns: Analysts


The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland on March 24, 2021.

Arnd Wiegmann | Reuters

LONDON – Credit Suisse President Antonio Horta-Osorio resigned on Sunday after violating Covid-19 isolation rules, the latest in a series of high-profile scandals that have rocked Swiss banks in recent years. .

Horta-Osorio took over as president of Switzerland’s second-largest lender last April, with a mission to clean up its corporate culture following its involvement. Archegos Capital collapse investment company and default supply chain finance company Greensill.

These appear at the back of a strange and protracted spy story that eventually leads to The resignation of former CEO Tidjane Thiam, who was replaced by Thomas Gottstein.

Horta-Osorio, who was found by internal investigation to have repeatedly violated Covid quarantine requirements in the UK and Switzerland, will be replaced by Axel P. Lehmann, chief executive officer of UBS. Credit Suisse emphasized that strategic overhaul, which was announced in November and includes a downsizing of its investment banking business, will continue undaunted.

Analysts told CNBC on Monday that the bank made the right call for the removal of Horta-Osorio and that Lehmann was a wise appointment as the company sought stability.

Bruno Verstraete, managing partner at Zurich-based asset management firm Lakefield Partners, said Lehmann was the choice that represented the stability the bank needed, with its rich experience in risk management. .

“One can only hope that the scandals will fade with time and they will be able to turn the bow in the right direction, away from the storm. It’s about time, that’s clear,” Verstraete said. with CNBC.

However, some emphasize that the problems lie deeper than an individual, with the bank facing numerous legal problems.

“I think Credit Suisse’s upcoming work in the months and years to come is frankly fixing risk management, fixing reputation, and obviously one factor that needs to be carefully considered is whether it can hold up. My talent?” Bob Parker, an investment committee member at Quilvest and a former senior advisor at Credit Suisse.

“One thing that happened after Archego was that some of the top talent in investment banking left the company.”

Stock prices are in trouble

Credit Suisse’s share price has fallen dramatically over the past 12 months, and analysts have pointed to a disparity from its domestic rival’s performance. UBS as a sign that investors are still skeptical about this change.

Credit Suisse is down more than 24% over the past year and was last trading at 9.37 Swiss francs ($10.25) per share on Monday morning, while UBS has gained more than 31% over the past 12 months to trades at around 18 Swiss francs/share.

“I think the performance of the stock price in recent months clearly reflects the view of investors that some of these legacy issues will take time to fix, and I think that can,” Parker said. may be true”.

Beat Wittmann, president of Zurich-based Porta Advisors, told CNBC that Credit Suisse will need to rebuild its reputation over time through changing business practices and demonstrating leadership, instead of looking for quick PR wins or “culture washes”.

“The price performance differential between Credit Suisse and UBS is 50 percent — not five, 50 percent — and so the stock is cheap, but for a variety of reasons,” says Wittmann.

However, he suggests that if the new chairman and management team can provide stability and strategic direction with “discipline and focus,” Credit Suisse stock is a “big buy” in the United States. current valuation.

“Key shareholders like Harris Associates, Dodge & Cox, etc., have suffered over the years and so has the public, so this is entirely in the hands of management and the board. can do,” he said.

What does the future hold?

Credit Suisse’s third-quarter revenue surged and the bank hit profit expectations despite the impact of allegations related to its handling of corruption allegations in Mozambique, among other legal issues.

Wittmann emphasized that along with financial fundamentals, Credit Suisse is operating against a very supportive macro backdrop.

“For banking businesses, the past year has been one of the best on record in terms of increased risk assets, record M&A activity, basically all factors being relevant,” he said. and beneficial to such a bank.”

Given the potential that could be unleashed if the reshuffle goes as planned and the stock price is low, Wittmann said he wouldn’t be surprised to see strategic acquisition efforts underway for Credit Suisse, noting that “the European context is long overdue for consolidation”, as some regulators have pointed out.

.



Source link

news7f

News7F: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button