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    Roundup: Credit Suisse faces restructuring challenges

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    Geneva, October 8th. Summary: Credit Suisse faces restructuring challenges

    Xinhua News Agency reporter Chen Binjie Martina Foss

    Recently, Credit Suisse (Credit Suisse), Switzerland’s second largest bank, was hit by negative news such as investment losses, and its stock price continued to fall. Analysts believe that the bank is in deep crisis and urgently needs to get out of the predicament through deep reform and restructuring.

    Founded in 1856, Credit Suisse Bank has an important influence in the global capital market. In 2021, Credit Suisse failed in two major investments, with cumulative losses of billions of dollars, raising questions about the bank’s risk management mechanism. Since the beginning of this year, Credit Suisse’s share price has fallen rapidly and its market value has evaporated sharply. At one point, the outside world speculated that the bank may go bankrupt, triggering a “Lehman moment” in Europe.

    American Morningstar stock analyst John Scholz said in an interview with Xinhua News Agency a few days ago that in the context of the challenging macro economy, Credit Suisse Bank has repeatedly failed in risk management and needs to sell Assets, raising funds to get out of the crisis.

    But Scholz doesn’t think a “Lehman moment” in Europe may be coming, stressing that Credit Suisse is a “well-capitalized bank”. He said: “Credit Suisse has no problems with its solvency and its capital adequacy ratio is in line with other banks. However, the bank still needs to raise capital, and this possibility and need is increasing.”

    Andreas Venditi, senior analyst at Swiss bank Von Tobel, believes that selling assets may be the first choice for Credit Suisse management. “Credit Suisse’s management will try to avoid increasing capital to dilute equity, so it prefers to sell assets.”

    He said that if Credit Suisse cannot sell assets at a reasonable price, it may still need to raise capital, “Fundraising does not mean that Credit Suisse has reached a point where it needs to be ‘rescue’, but to A high price to pay for the deep restructuring of the bank”.

    In July, Credit Suisse underwent a major management reshuffle, appointing Ulrich Kerner as CEO. On Sept. 30, Kerner issued a memo saying Credit Suisse was well capitalized and liquid, but acknowledged that the bank was at a “critical juncture.”

    Credit Suisse said it is considering various measures to strengthen the bank’s wealth management business, transforming the investment bank into a capital-light bank dominated by advisory businesses. The bank will announce its new strategic plan on October 27.

    Scholz said that Credit Suisse needs to give the market a clear understanding of its future core business focus and respond to market concerns about its losses and the loss of talent and customers.

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