Credit Suisse Under a Ratings Sword of Damocles: Credit Suisse was spared further credit rating downgrades despite announcing billions of dollars in losses last year. Nevertheless, institutional investors are casting a wary eye… Ratings Pensionfunds
Last fall, when recently-minted CEO Ulrich Koerner presented a new strategy to pull Credit Suisse out of its quagmire, the major rating agencies held back with downgrades. Although major US credit rating agencies S&P Global, Moody's, and Fitch issued assessments on the current state of Switzerland's second-largest bank, it has so far been words and no action. S&P Global expects Credit Suisse to suffer a loss of around 1.
Should the bank's outstanding debt be downgraded to junk status, it would have a direct impact on institutional portfolios and the assessment of counterparty risk. In such a case, a new wave of securities sales and asset outflows could be expected, observers agree when asked.This would be a severe blow to its Swiss business with pension funds and institutional investors, where Credit Suisse still enjoys an excellent reputation.
One industry insider notes that Credit Suisse is less likely to come out on top in new business, regardless of the performance and products the big bank offers. «When it comes to bidding, it has become more difficult for Credit Suisse to win the mandate,» says one observer, with much depending on the individual risk considerations of the pension funds.
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