On reflection, it is perhaps a surprise that shares in Credit Suisse fell by a mere 12% as it announces yet another revamp.
The Swiss bank has been battling rumours of a looming collapse since the beginning of October. But what is another 12% when the share price has already tumbled by more than half since the start of the year. Now it is to raise billions, axe thousands of jobs and resurrect the First Boston brand.
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Founded in 1932 and acquired by Credit Suisse in 1990, it was referred to as CS First Boston after 1993 and part of Credit Suisse First Boston after 1996. The First Boston part of the name was phased out by 2006. Those of with long memories can recall many a scandal associated with the First Boston name. Is this really the right time to be bringing the brand back to life?
Inevitably, the latest plans revolve around trying to clean up a number of messes such as Greensill and Archegos. It will reduce risk-weighted assets in its investment bank by 40% over the next three years and focus on institutional and wealth management clients with equities, foreign exchange and rates. And it will set up a ‘bad bank’ for high-risk assets that it seeks to wind down.
According to the GlobalData Multinational Companies Database, Credit Suisse currently has 88 global subsidiaries (companies in which Credit Suisse has a stake larger than 50%). Switzerland is the main location for its subsidiaries with 16, while the US is a close second with 15.
As RBI sister title Investment Monitor reports, Credit Suisse is considered “too big to fail” as a systemically important financial institution integral to the economies it serves. A high number of employees, subsidiaries and FDI projects are dependent on the continuation and recovery of Credit Suisse, so while the share price may still be low, the stakes remain high. But I remain unconvinced about the First Boston aspect to the latest revamp.
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