Credit Suisse: Challenging Year For Corporate Governance; Improving Risk Management Remains Key

This commentary recaps the main events that have affected Credit Suisse Group AG’s risk management and corporate governance in the last year. It also addresses how these developments have affected DBRS Morningstar’s assessment of Governance risk factors, which is used to determine ESG risk factors, and their potential impact on the Group’s credit ratings.

Summary highlights from the commentary include:

• The Archegos issue revealed significant risk management failures, which materialised in a loss in Q1 2021
• Risk management deficiencies in the Group’s asset management business led to additional regulatory capital requirements
• Management stability track record is needed to restore confidence, an important factor underpinning franchise
• Successful implementation of the new strategy remains key to Credit Suisse AG’s franchise

“The last twelve months have been challenging for Credit Suisse Group AG from a risk management and governance perspective after a series of events highlighted deficiencies in both areas. We consider it remains important for CSG’s current ratings that a robust risk management culture is implemented, as well as demonstrating that it is implementing a corporate culture and corporate governance framework that has very strong ethical norms. However, we consider that any progress in rebuilding investor confidence and improvement of risk management and business culture of the Group will likely be more visible in the medium-term” said Maria Rivas, Senior Vice President from the DBRS Morningstar Global Financial Institutions team.