Decision day for Credit Suisse: On Thursday, the bank will present its plan to find a way out of the ongoing crisis. For the proud great bank of old has sometimes become a giant standing on clay legs. It should now be clear how the investment bank, wealth management, Swiss bank and global wealth management will continue.
In addition, it should be clear how the bank, which lost only quarterly and will continue to lose in the near future, will make money again in the coming years, how much the dismantling and conversion will cost, and where all this will be spent. Money will come for restructuring.
CS should now respond to the following fields.
Investment Bank
There is a kind of triple split: Certain parts will be sold, such as business related to securitization of debt securities such as mortgage loans or credit card debt. Other businesses may be turned over to a “bad bank” to relieve the balance sheet and therefore capital requirements. However, they should expect CS to support certain services, especially very wealthy clients and entrepreneurs, from their banks in financing their businesses or in corporate transactions.
Asset Management
For institutional investors such as pension funds, wealth management is not necessarily part of a large bank’s business. There has already been speculation about the sale of at least parts of this division.
Global asset management
CS has to rely on this because the bank for private clients is still one of the best addresses worldwide. However, confidence in the new strategy is necessary to attract new customers again. It is conceivable that the bank would withdraw from individual, less lucrative markets.
Swiss bank
CS does an excellent job in Switzerland. The Swiss bank is considered the “pearl” of the bank and is part of the founding of the “new” Credit Suisse. However, there may be layoffs and branch closures here too. Because in order to control costs again, the entire bank needs to save.
sales
CS sells silverware, for example Hotel Savoy at Paradeplatz is up for sale. Other pieces have already found buyers. As a result, the bank could receive about 2.5 to 3 billion francs.
capital increase
The important question: Will the sales bring in enough money to fund the transformation? No, believe the vast majority of observers! This means that CS needs more fresh capital and will likely have to raise this capital through a capital raise. How much and when, the bank has to give an answer.
Employee
Restructuring the bank could cost 5,000 people, a tenth of the workforce. Many jobs will automatically disappear from CS’s payroll department if parts of the bank are sold. However, it should not be possible without layoffs.
Even if the bank management convinces with their plan, this is only the beginning of a long and painful process, not the end. Because only a really deep cut can get the bank out of trouble, and all wounds may take some time to heal.