S&P downgrades Credit Suisse Group rating

Credit Suisse Group AG’s credit rating has been downgraded to BBB from BBB+ by Standard & Poor’s, a blow for the Swiss bank which reported a first-quarter loss and is facing increasing shareholder unrest following a string of scandals.

Its outlook was changed to stable from negative, the rating agency said.

Credit Suisse reported a first-quarter loss last month and launched a management overhaul after racking up billions in losses during 2021 from failed investments.

Investors voiced their discontent by rejecting the board’s proposal to discharge management from liabilities for the 2020 financial year at the bank’s annual general meeting in April.

The bank has been trying to reform its risk management culture after a series of costly scandals, which have prompted multiple rounds of management shake-ups, abrupt departures, and internal and external investigations.

But S&P said a turnaround from scandals such as the Archegos affair, Greensill and others would not be quick.

Credit Suisse was hit by twin scandals in March 2021, when the implosion of US investment firm Archegos led to a $5.5 billion hit and $10 billion worth of its supply chain finance funds (SCFF) linked to now-insolvent British financier Greensill were shuttered. It is still working to recoup assets for SCFF investors.

“Although the group is actively working on remediation actions, we think a lasting change to the risk culture in such a complex global organisation will take time,” the agency said.

“We now think this will be even more difficult in a deteriorating economic and business environment.”

S&P said it saw management targets to restore profitability as ambitious, particularly in view of the management upheaval and economic uncertainties.

Published in The Express Tribune, May 18^th, 2022.

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