Credit Suisse’s turnaround just got a lot tougher as market reels

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Credit Suisse's ability to extract good terms from potential buyers of businesses it wants to exit has been weakened by the market rout, analysts say.

“The issue Credit Suisse runs into is that it almost becomes a self-fulfilling prophecy, not so much from a liquidity perspective, but their star talents start to leave or the rich people start pulling their money out of the private bank and then the business fundamentals begin to decline,” said James Finch, clinical associate professor of finance at New York University Stern School of Business.

There are also concerns of possible further outflows from the private banking business, analysts at Citigroup wrote in a note to clients on Monday. In his note, Beaumont pointed to various measures of Credit Suisse’s capital levels, saying it seemed to be “sufficient to absorb upcoming losses from divestments/asset sales.”

 

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