Credit Suisse’s challenge back seen in three miserable charts

(Bloomberg) — Credit Suisse Group AG is working to restore confidence in its battered brand, with investors so far less optimistic that last month’s strategic overhaul will succeed after years of scandal and mismanagement.

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The following charts show three key aspects to the Zurich-based bank’s turnaround — and above all, the bank continues to struggle. Stock prices hit an all-time low on Tuesday, default insurance costs skyrocketed again and the wealthy clients the lenders rely on continued to withdraw their funds.

Read more: Credit Suisse sees $88 billion outflow as confidence slumps

With another loss impending for the final quarter of the year and a $4 billion funding round underway that will reduce existing shareholders’ holdings, Credit Suisse is counting on success. The patience of investors and employees for the sake of restructuring takes time to achieve. CEO Ulrich Koerner has set 2024 as the year the bank is “definitely” profitable again.

Credit Suisse shares opened higher on Wednesday after hitting a low of 2.90 Swiss francs ($3,0417) on Tuesday, with shares on track for their longest losing streak since October. 2007. Shares have fallen 18% since the bank announced a massive withdrawal from its client wealth management business last week. The downtrend means Credit Suisse is no longer Switzerland’s second-largest bank by market capitalization, lagging behind asset manager Julius Baer Group Ltd.

However, the current drop is also being influenced by the ongoing capital raising through rights issuance. The new stock’s first trading day is scheduled for December 9, potentially easing some of the downward pressure on the stock.

Credit Suisse’s debt rating downgraded by rating agencies has affected the comfort level of customers when dealing with banks. They have also increased borrowing costs and the price that investors pay for default insurance. Credit default swaps on the bank’s senior debt rose to their highest levels since the financial crisis in early October amid persistent rumors about the bank’s stability line and hit another record on Tuesday.

Read more: Credit Suisse cut by S&P one level above junk status

The bank issued US bonds with a yield of more than 9% in early November, as well as euro bonds that pay a lower yield of 8%. The rate is the second-highest ever for a new high-level investment-grade banking transaction in euros.

Read more: Credit Suisse forced to pay low-end returns for cash infusion

Terms could further deteriorate if Credit Suisse suffers another credit downgrade as two companies – Moody’s and Fitch – have negative outlooks for the bank, with both currently rating the bank higher than junk. two steps. Moody’s said in a rating decision earlier this month the downgrade could be triggered if it fails to stem customer outflows.

Credit Suisse is running a campaign to rebuild trust following a wave of withdrawals. Executives said last week that withdrawals from wealth management had stabilized but not reversed since October.

However, hundreds of wealthy customers in Asia have managed to deposit their funds with Swiss lending rival UBS Group AG in the region amid turmoil and the bank is planning to reallocate staff to handle these expanding accounts, people familiar with the matter previously told Bloomberg. Morgan Stanley is also among the banks that benefited from historic outflows at Credit Suisse.

–With assistance from Jan-Patrick Barnert and Allegra Catelli.

(Updated with stock)

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