Rating agency Moody's Investors Service expects losses for Credit Suisse to swell to $3 billion by year-end, potentially bringing its core capital below the key 13% level, Moody's lead analyst on the bank told Reuters.
Credit Suisse has reported 1.9 billion francs of losses in the first half of the year. In July, the bank said it expected to operate with a common equity tier 1 ratio of between 13% and 14% for the rest of 2022.
The Swiss lender has been battered by scandals and losses and is racing through a restructuring plan under new Chief Executive Ulrich Koerner. Wild market swings and a social media storm are making it increasingly difficult for the bank to stem losses and regain its footing.Moody's downgraded its rating on Credit Suisse in August and has since kept its negative outlook.
In July, Credit Suisse announced its second strategy review in a year and replaced its chief executive, bringing in restructuring expert Koerner to prune its investment banking arm and cut more than $1 billion in costs. Credit Suisse's U.S. businesses focusing on structured products and leveraged finance previously generated big profits because of low interest rates, but those fortunes have now changed. "Now clearly, interest rates are significantly increased. And the credit conditions are not benign anymore."
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