Credit Suisse Strategy Overhaul: Full Transformation of Investment Bank With High Execution Risks

Credit Suisse Group AG (CSG or the Group) has announced a significant overhaul to its strategy whilst also reporting a significant quarterly loss that is indicative of the stress the bank has suffered in its core franchise.

• The Group reported a net loss attributable to shareholders of CHF 4.0 billion in Q3 2022, in addition to the CHF 1.6 billion loss in Q2 2022.

• The Group’s performance has continued to be well below peers in its core investment banking and wealth management businesses. While the Q3 loss was largely driven by a significant impairment of deferred tax assets of CHF 3.7 billion, the Group has also experienced a significant decline in net revenues through a combination of net outflows, market volatility that impacted the valuation of Assets under Management, and lower Investment banking revenues across all businesses.

• The Group’s new strategic plan is aggressive but needed. The plan includes the complete transformation of the Investment Bank franchise to make it more aligned with the Wealth management business, however, it will be a painful three year process of restructuring.

“DBRS Morningstar sees high execution risks for Credit Suisse’s restructuring plan, while the challenging economic and geopolitical backdrop will make it more difficult to wind down non-core assets.” said Vitaline Yeterian, Senior Vice President