Zurich-based financial powerhouse Credit Suisse plans to improve its operating outlook after losing one of its main backers.
Credit Suisse recently lost one of its most important sponsors after Harris Associates sold its entire stake in the Swiss banking giant. Harris Associates, Credit Suisse’s largest shareholder for several years, decided to end ties with the Swiss bank after two decades of ownership. According to Harris Associates international equity investment director David Herro, the company dumped shares of Credit Suisse in recent months.
Herro also explained that Harris opted out of the financial services platform due to its murky future. Without elaborating on the details, the stock picker said Harris had lost patience with Credit Suisse’s strategy to curb persistent losses. In addition, Herro, who also serves as a vice president at Harris Associates, said the departure of the Credit Suisse client was cause for concern.
Commenting on the gloomy generality of Credit Suisse’s recent performance, Herro explained:
“There is a question about the future of the franchise. There have been big exits from wealth management.”
Herro was likely referring to the increase in withdrawals reported by Credit Suisse during the fourth quarter, which amounted to withdrawals exceeding 110 billion Swiss francs. Suggesting that Harris has “plenty of other options to invest in,” the company’s stock picker also added:
“Rising interest rates mean many European financials are going in the other direction. Why bet on something that is burning capital when the rest of the sector is now generating it?
Harris initially reduced his stake from 10% in Credit Suisse to 5% late last year. Shares of the global investment bank fell to a record low last week after a dismal earnings report in February. Credit Suisse had reported running a larger-than-expected deficit amid record outflows. However, the loss of Harris as a prominent shareholder could further plunge the Swiss bank’s leadership into further despair.
Credit Suisse shares down 95% since summer 2007 amid loss of backers Harris Associates
Credit Suisse shares are down a staggering 95% since the summer of 2007. The Zurich-based company also missed a rally from its European peers that began in late 2022. This rally came as monetary tightening increased prices. credit profitability prospects.
Despite current obstacles, including the loss of one of its main backers, Credit Suisse remains focused on its goals. In addition to being “ahead of our plan” and having “clear strategic objectives”, Switzerland’s top financial services facilitator also added:
“We are laser focused on successfully executing our plan and advancing towards our goals to ensure the new Credit Suisse delivers sustainable value for all of our stakeholders.”
Credit Suisse has increased efforts to win back clients and stem the exodus of senior staff. In addition, Switzerland’s second largest bank is also looking to significantly overhaul its mode of operation. The banking giant intends to cut costs and jobs to revive its fortunes.
One way Credit Suisse plans to improve its operating outlook is by creating a separate business for its investment bank. This business would reportedly be under the bank’s CS First Boston brand.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify the crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
