Shares of Credit Suisse fell more than 6% on Tuesday after ratings agencies Moody’s and S&P’s “negative” outlook on the Swiss bank, days after it appointed a new top boss to help it recover from a string of scandals and losses.
Moody’s Investors Service downgraded the group’s senior unsecured debt ratings by one notch to “Baa2” and long-term senior unsecured debt and deposit ratings by a notch to “A2.” The agency maintained its “negative” outlook on the ratings.
“Baa2” is a lower-medium grade rating, just two notches above “junk” or sub-investment grade category.
Moody’s said its downgrade reflected challenges the group faces in repositioning its investment bank, among other issues.
S&P Global Ratings revised its outlook on all Credit Suisse Group entities to “negative” from “stable.”
“A little late, but not unexpected. Currently one of the worst run banks globally. It’s been one scandal or trading mistake after another for years. Hopefully, the new CEO Ulrich Koerner can turn it around,” said Thomas Hayes, managing member at Great Hill Capital. Shares in Zurich-based Credit Suisse, down more than 40% this year, fell nearly 6% by 12:25 pm GMT. Rival UBS’s stock has lost about 7% this year.
A trader said U.S. House of Representatives Speaker Nancy Pelosi’s trip to Taiwan may also be weighing on the stock, given the bank’s sizeable Asia-Pacific exposure.
Credit Suisse last week named asset management boss Koerner as its new CEO, tasked with scaling back investment banking and cutting more than $1 billion in costs.
The move come after Credit Suisse suffered billions in losses last year, including a $5.5 billion loss on the default of U.S. family office Archegos Capital Management and the shuttering of $10 billion of supply chain finance funds linked to collapsed British financier Greensill.
In June, Credit Suisse was convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang. It is appealing the verdict. (Reporting by Noor Zainab Hussain, additional reporting by Bansari Mayur Kamdar in Bengaluru and Danilo Masoni in Milan; Editing by Vinay Dwivedi)