December 6, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Credit Suisse Delays Report and Cuts Investment Jobs

Black
clouds once again hang over the Swiss banking giant Credit Suisse. The lender’s
shares dropped after the postponement of the annual report following the US
Securities and Exchange Commission (SEC ) call, and the investment banking team in
Japan was significantly reduced.

According
to media reports, Credit Suisse had to delay the publication of its annual report after receiving a subpoena from the SEC the previous evening regarding cash
flow statements dating back three years.

Without
giving any additional details, the bank stated that the SEC’s feedback was
technical and had no impact on its financial statements for 2022, which were
released last month.

However, shares
of the lending giant received the news rather pessimistically and were down more than
5% to $2.75 before the main session on Wall Street started. Credit Suisse’s
stock has fallen 70% in the past year in response to unfavorable market
conditions, declining bank revenues and several controversies that resulted in
a significant outflow of client assets under the institution’s management.

Additionally, negative
news came from Japan where Credit Suisse was to cut most of its
investment banking team of more than 20 people. The Reuters news agency
reported the information on Thursday, which cited three people familiar with
the matter.

Credit
Suisse’s investment banking division, which houses capital markets and M&A
advisory businesses, has undertaken two-phase restructuring in Japan, nearly
halving the number of its bankers in November and then shedding all but a few
in January.

Refinitiv’s
data compilation shows that in 2021 Credit Suisse secured the eleventh rank in
Japan’s investment banking league. However, the bank dropped out of the top 20
in 2022.

Strategic Overhaul in Credit
Suisse

The list of
problems facing Credit Suisse is very long. When the lender published its quarterly report in October 2022 showing
a $4 billion loss in three months, the bank saw the need for radical
restructuring. As part of this, it planned to raise $4 billion in additional
funding and lay off up to 9,000 employees.

News of the
headcount reduction first emerged in mid-January, with job cuts of around 10% in the European investment banking business. Previously, the financially
troubled entity allegedly made hundreds of job cuts already in December,
primarily at its London and Zurich offices.

The
controversy surrounding Credit Suisse’s operations and the multi-million dollar
fines it paid in 2022 caused a total of CHF 110.5 billion to leave the lender’s
accounts. Total assets under management amounted to CHF 1.3 trillion at the end
of the year, falling 20% from a year earlier.

At the
beginning of February, investors saw an accurate picture of Credit Suisse’s condition
when the institution published its annual report and reported that the loss in
2022 amounted to CHF 7.3 billion, compared to the CHF 6.53 billion forecasts by
analysts.

According
to the Swiss Financial Market Supervisory Authority (FINMA), Credit Suisse is currently facing enforcement proceedings over its business ties with financier
Lex Greensill and his firms. The regulator alleges that the bank has
“seriously breached” its supervisory obligations.

FINMA has
imposed remedial actions on Credit Suisse to address the breach of its
supervisory obligations . These measures include executive-level reviews of the
bank’s 500 most significant business relationships, specifically on
counterparty risks conducted periodically.

Black
clouds once again hang over the Swiss banking giant Credit Suisse. The lender’s
shares dropped after the postponement of the annual report following the US
Securities and Exchange Commission (SEC ) call, and the investment banking team in
Japan was significantly reduced.

According
to media reports, Credit Suisse had to delay the publication of its annual report after receiving a subpoena from the SEC the previous evening regarding cash
flow statements dating back three years.

Without
giving any additional details, the bank stated that the SEC’s feedback was
technical and had no impact on its financial statements for 2022, which were
released last month.

However, shares
of the lending giant received the news rather pessimistically and were down more than
5% to $2.75 before the main session on Wall Street started. Credit Suisse’s
stock has fallen 70% in the past year in response to unfavorable market
conditions, declining bank revenues and several controversies that resulted in
a significant outflow of client assets under the institution’s management.

Additionally, negative
news came from Japan where Credit Suisse was to cut most of its
investment banking team of more than 20 people. The Reuters news agency
reported the information on Thursday, which cited three people familiar with
the matter.

Credit
Suisse’s investment banking division, which houses capital markets and M&A
advisory businesses, has undertaken two-phase restructuring in Japan, nearly
halving the number of its bankers in November and then shedding all but a few
in January.

Refinitiv’s
data compilation shows that in 2021 Credit Suisse secured the eleventh rank in
Japan’s investment banking league. However, the bank dropped out of the top 20
in 2022.

Strategic Overhaul in Credit
Suisse

The list of
problems facing Credit Suisse is very long. When the lender published its quarterly report in October 2022 showing
a $4 billion loss in three months, the bank saw the need for radical
restructuring. As part of this, it planned to raise $4 billion in additional
funding and lay off up to 9,000 employees.

News of the
headcount reduction first emerged in mid-January, with job cuts of around 10% in the European investment banking business. Previously, the financially
troubled entity allegedly made hundreds of job cuts already in December,
primarily at its London and Zurich offices.

The
controversy surrounding Credit Suisse’s operations and the multi-million dollar
fines it paid in 2022 caused a total of CHF 110.5 billion to leave the lender’s
accounts. Total assets under management amounted to CHF 1.3 trillion at the end
of the year, falling 20% from a year earlier.

At the
beginning of February, investors saw an accurate picture of Credit Suisse’s condition
when the institution published its annual report and reported that the loss in
2022 amounted to CHF 7.3 billion, compared to the CHF 6.53 billion forecasts by
analysts.

According
to the Swiss Financial Market Supervisory Authority (FINMA), Credit Suisse is currently facing enforcement proceedings over its business ties with financier
Lex Greensill and his firms. The regulator alleges that the bank has
“seriously breached” its supervisory obligations.

FINMA has
imposed remedial actions on Credit Suisse to address the breach of its
supervisory obligations . These measures include executive-level reviews of the
bank’s 500 most significant business relationships, specifically on
counterparty risks conducted periodically.

link