How big is reputation damage in CS?

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Wednesday saw many investors lose confidence in the Credit Suisse brand. CS shares fell 24 percent. Then on Thursday morning there was a big relief: the Swiss National Bank (SNB) provided Credit Suisse with 50 billion Swiss Francs. The stock is up 20 percent over the course of the day.

“This is a super slump for the Credit Suisse brand,” brand expert Stefan Vogler, 64, tells BlickTV. When trust is lost and people withdraw money, it’s the beginning of the end for a bank. Customers have already withdrawn: Swiss customers alone have withdrawn customer deposits of more than CHF 50 billion in 2022. Damage to reputation also affects the Swiss brand.

CS needs money from SNB

According to reputation expert Bernhard Bauhofer (60), SNB’s sedative was sorely needed. “On the one hand, the reputation of the Swiss financial center, and on the other hand, CS needs money for the business,” he says. The size of the cash injection will show how serious the problem is.

In its 2022 annual report, CS emphasized that it has sufficient liquid funds. The core capital ratio was 14.1 percent in the fourth quarter of last year.

“However, refinancing conditions are getting worse and worse. Capital base is above target. But that could change quickly,” explains Bauhofer.

CS needs to weaken

What can Credit Suisse do to restore trust? Regaining trust can work, as the UBS example from 2008 showed. “I can certainly imagine that the brand could be salvaged in the medium term,” Vogler says.

This requires proper management: Bauhofer currently does not see potential candidates for this post. He doubts that CEO Körner or Chairman Lehmann can turn the ship. “Operationally, nothing has changed in the SNB loan business. The good guys have already abandoned the sinking ship.”

CS has a chance to survive only if it becomes more focused and leaner. This is what the bank is aiming for. The transformation is scheduled to be completed by 2025.

Finma reacted too late

Bauhofer thinks Finma should have intervened earlier. “I find it problematic that things have become this way,” he says. After all, the reputation issue in CS is nothing new and has been around for years.

Now we will see if investors regain their trust in the bank. CS is always open to negative surprises. “Ultimately, the share price is just an indicator,” Bauhofer says. “Whether this is justified is debatable.”

Source :Blick