Moody's downgrades some Credit Suisse senior unsecured debt and deposit ratings By Reuters

Moody's downgrades some Credit Suisse senior unsecured debt and deposit ratings By Reuters

© Reuters. FILE PHOTO: The logo of Swiss bank Credit Suisse is seen at a branch office in Bern, Switzerland October 28, 2020. REUTERS/Arnd Wiegmann

By Brenna Hughes Neghaiwi

ZURICH (Reuters) – Credit rating agency Moody’s (NYSE:) on Tuesday downgraded some of Credit Suisse ‘s (S:) senior unsecured debt and deposit ratings, saying risks related to the Archegos and Greensill affairs would take significant resources to resolve.

Switzerland’s second-largest bank was forced to wind down $10 billion in funds linked to collapsed supply chain finance firm Greensill and then suffered billions in losses after family office Archegos imploded.

“As indicated by similar cases in the past, the investigation and remediation of these matters will likely consume a significant amount of bank resources and managerial focus and take time to resolve, during which CS will remain vulnerable to the aforementioned risk factors,” the rating agency said.

Credit Suisse declined to comment.

S&P and Fitch earlier this year both revised Credit Suisse’s outlook to negative following the Archegos and Greensill scandals.

Moody’s on Tuesday downgraded its long-term senior unsecured debt and deposit ratings of Credit Suisse AG by one notch to A1 from Aa3, pointing to deficiencies in the bank’s risk management.

Credit Suisse AG is a sub-entity that houses the bank’s main operations, including its investment banking and wealth management businesses.

A framework revision had also reduced Moody’s view on Credit Suisse AG’s capacity to absorb unexpected losses, the rating agency said.

Moody’s affirmed Baa1 ratings on long-term senior unsecured debt for the Credit Suisse Group as a whole, and said the outlook for Credit Suisse’s ratings was now stable.

The rating agency also said it expected the bank to be able to contain further possible reputational effects and did not expect strategic adjustments to meaningfully impair Credit Suisse Group’s ability to deliver on mid-term profitability goals.

Nonetheless, the agency highlighted potential additional financial strains from the Archegos and Greensill matters, and the potential for client defections and franchise impairment as cause for concern in its downgrade of Credit Suisse AG.

“Although Moody’s anticipates that CS will enhance its governance and risk management practices, including implementing the recommendations resulting from internal and external investigations, the extent and effectiveness of these measures will remain uncertain for some time,” Moody’s said.

“In addition, the final financial and reputational implications of the aforementioned events for CS also remain unclear.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link

Leave a comment

Send a Comment

Your email address will not be published.

Enter text shown below: