Disgrace for Credit Suisse: Credit rating agencies are penalizing the second largest Swiss bank for its new strategy. Moody’s and S&P – both US rating agencies – downgraded their assessments of Credit Suisse’s liabilities on Tuesday evening.
Rating agency S&P downgraded the liabilities of Credit Suisse AG and other major CS companies to “A-/A-2” from the previous “A/A-1” rating, as announced Tuesday evening. It also downgraded its holding company, Credit Suisse Group, from “BBB” to “BBB-“. This means that CS still has an “average credit score”.
ZKB has Triple A
Credit Suisse therefore performs poorly when compared to other Swiss banks. UBS is at “A/A-1” level, while most other Swiss financial institutions even get AA/A-1+. According to S&P, Zürcher Kantonalbank (ZKB) should have the best credit rating. It is the only Swiss bank to receive three A grades.
In addition to S&P, the agency Moody’s downgraded Credit Suisse AG’s liabilities to “A3” from the previous “A2”. On the other hand, it maintains the previous “Baa2” rating for Credit Suisse Group. However, the outlook for both ratings remains negative, according to the statement.
Reasons for downgrading
Both rating agencies refer to the significant risks involved in carrying out the announced restructuring, particularly because of their scope and complexity, as Moody’s wrote in the report.
In addition, there is the current challenging economic and market environment that could have a negative impact on the pace and costs of restructuring, according to S&P. The future location of “CS First Boston”, where parts of the investment bank will be outsourced, is still unclear.
Capital increase from Saudi Arabia
Patient Credit Suisse presented sweeping restructuring measures last week to get out of the current crisis. The loss-making investment bank will be drastically reduced and thousands of jobs will be laid off in the coming years. At the same time, the bank is looking to raise new capital with the Saudi National Bank stepping in as a key investor. (nim/SDA)
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
