Credit Suisse slipped to an all-time low on Wednesday: explore why

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on Nov 23, 2022
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  • Credit Suisse says it could lose as much as $1.6 billion in fiscal Q4.
  • Its shareholders approved $4.2 billion capital raise on Wednesday.
  • Shares of Credit Suisse Group AG closed at an all-time low today.

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Credit Suisse Group AG (SWX: CSGN) is trading down on Wednesday after the struggling lender said it could lose as much as $1.60 billion in its fourth financial quarter.

Credit Suisse continues to wrestle with outflows

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The global financial services firm continues to see net asset outflows that, together with lower deposits, will result in a hit to net interest income, it said in an update this morning.

In wealth management, these outflows have reduced substantially from the elevated levels of the first two weeks of October 2022 but have not yet reversed.

Last month, Credit Suisse sold its stake in Allfunds Group (British wealthtech company) that, it added, will contribute $79.50 million to loss. The bank also plans on reducing its securitised products group from $75 billion to roughly $20 billion by mid-2023.

It will be selling its SPG assets to PIMCO and Apollo Global Management.

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Credit Suisse to raise $4.2 billion in new capital

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Part of why the stock is trading down is the proposal to raise $4.2 billion in new capital that shareholders approved on Wednesday. Credit Suisse plans on using that capital to finance the monumental strategic overhaul it announced last month (read more).

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These decisive measures are expected to result in a radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital, each of which are progressing at pace.

The bank expects the overhaul to help cut costs by $2.65 billion by 2025, nearly half of which it’s aiming to trim in 2023. According to Credit Suisse, it has already started with lowering headcount and other costs not related to compensations.

This dividend stock is now down about 60% for the year.

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