A small bloodbath caused by shareholders after the stock market opened: Credit Suisse shares initially fell 7.2 percent to a starting value of 4.41 francs. After a while we proceeded further down the river. Losses in the stock market expanded to a price drop of over 15 percent.
However, this is still far from the all-time low where CS share hit CHF 3.52 at the beginning of the month. Since then, the price has rebounded strongly.
Still, the price drop shows that investors are taking restructuring plans submitted by CS to court. CS had promised far-reaching measures, especially at the investment bank. Some of the work is outsourced to CS First Boston.
Shares traded volumes are very high – one and a half times the average daily volume.
This is what analysts say about CS transformation
There are different ratings in the first comments. Most of them are negative.
Bank Vontobel writes: Strategic measures are largely in line with what has been reported in the media in recent weeks, although some market participants expect more substantial cuts to the investment bank. With the measures and regulations announced, CS now embarks on a long and arduous journey to regain the reputation and trust of various stakeholder groups. Management can no longer afford any major missteps.
ZKB judges: In CS, the focus is now clearly on strategic realignment. This is accompanied by a relatively strong contraction of the investment bank. He views the plans positively, despite some implementation risks and still unanswered questions about financing. The responsible analyst believes that the capital increase is also expected by the market.
Investment bank Jefferies: “At first glance, the high net loss is a new surprise. The capital increase is also bigger than we expected.” Today, Credit Suisse investors have a lot of news to digest.
Goldman Sachs writes: He was a little disappointed as the targeted return from 2025—that is, after the transformation—was below expectations of over 6 percent. Perhaps this just reflects a certain degree of prudence, says the responsible analyst.
Kepler judges: It seems that CS is finally winning and is actively dealing with the issues of the business model. “The steps taken seem to be in the right direction,” said one Kepler analyst.
Thousands of jobs gone
There is also a heavy austerity program with painful effects on staff: 2,700 layoffs will be made this year. By 2025, CS wants to cut 9,000 jobs to reduce its cost base. Layoffs are generally well received by investors. But in this case they clearly lack confidence that the enormous cost reduction work in CS is being done.
Despite the outsourcing of its businesses and massive downsizing, CS still needs more fresh cash and therefore announced a capital increase of CHF 4 billion. Among other things, the Saudi central bank is investing 1.5 billion in CS. The Saudis will thus become one of the largest shareholders of the Swiss bank.
The announcement of the massive restructuring of the big bank came with the fourth largest quarterly loss in a row: CS had to report a loss of over 4 billion francs on Thursday. However, investors should focus on restructuring plans, not billions of dollars in losses.