Photo: Chicago Booth
Moody’s has put Swiss bank Credit Suisse on downgrade watch for its long-term credit. [via Bloomberg]Currently, the holding company Credit Suisse Group has a rating of Aa2, and Credit Suisse bank has a rating of Aa1. A downgrade wouldn’t even put the company near non-investment grade, but may still affect investor sentiment towards Switzerland’s second largest bank after a year of lukewarm news.
Earlier this month, the company reported weak Q3 earnings — a net income of around 683 million Swiss francs compared to the expected 979 million Swiss francs. The investment bank division posted a loss of 190 million Swiss francs, despite a debt valuation adjustment of 266 million Swiss francs (which are meant to boost earnings). They’ve also announced over 3,000 job cuts this year due to weak earnings.
The losses in the investment banking division, combined with falling income at the wealth management division and the need for restructuring, fuelled Moody’s decision to put the company on a downgrade watch, Bloomberg reported.
But Credit Suisse may already be taking steps to avoid that possible downgrade. It was reported this morning that the company will be combining its private banking unit Clariden Leu with the rest of its operations. This move may yield savings of around 200 Swiss million francs.