Credit Suisse Group AG

The negative outlook reflects open questions about the group's risk management, risk appetite, and potential financial and nonfinancial risks from its 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, which was already tarnished following the high-profile governance issues in 2020 that culminated in 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

...We see rating sensitivity to adverse scenarios as material, because of tail risks related to ongoing litigation and regulatory investigations, as well as to execution of the targeted restructuring program. Credit Suisse Group AG's (Credit Suisse's) recently announced its revised business strategy with intended capital reallocation to less risky wealth management away from investment banking operations and specifically prime brokerage is broadly in line with our expectations, supporting its credit metrics. While the group saw solid operating revenues in 2020 and 2021, the sequence of events over the same period materially impaired its internal capital-generation capacity, and raised doubts about management's ability to sustainably close the gap to peers in terms of risk return profile in the medium term. In our view, Credit Suisse's execution of the revised strategy may prove challenging. While revenue from investment banking is set to decrease in line with the exposure reduction and the...

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