Credit Suisse Group AG

The negative outlook reflects open questions about the group's risk management and appetite and potential financial and nonfinancial risks from exposures to the U.S. hedge fund and Greensill group. Credit Suisse's management of its relationships with the U.S. hedge fund and Greensill has the potential to damage the bank's reputation that was already tarnished following high-profile governance issues in 2020, which culminated with the CEO's departure. We could lower the ratings on Credit Suisse Group AG, Credit Suisse AG, and operating subsidiaries over the next 12-24 months if: We conclude that the rating does not reflect the group's risk return profile adequately; Investigations reveal broad material risk management deficiencies across segments; Material new litigation risks emerge; The regulatory investigations into

...A global franchise and diversified business mix, together with strong capitalization, are key to Credit Suisse Group AG's creditworthiness. We base our ratings on the bank's globally diversified business mix with a high and increasing share of wealth management activities and strong focus on Switzerland, which contributes to about half of the group's pretax income and we continue to regard as one of the most resilient countries worldwide. Credit Suisse shows strong capital ratios, underpinned by our projection of its risk-adjusted capital (RAC) ratio at 12%-13% by 2022, which is higher than most peers'. While recent episodes highlight risks to the business model and raise questions about the quality of the group's risk management, in our base-case scenario, we do not expect long-lasting reputational damage. The group's material exposure to capital markets and risks steaming from its investment banking and asset management activities, and the volatility of earnings are negative rating factors....

Full Report