Credit Suisse Outlines Radical Plan as Q3 Loss Exceeds $4 Billion
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Following an unforeseen 4 billion Swiss franc shortfall in the Q3 of the year, the Swiss lender released a blueprint for sustainability on Thursday, according to its chairman Axel Lehmann. Investors were unimpressed with the statement, which came after a rough few weeks for the bank. The struggling bank's shares, which have recently plunged to historic lows, fell around 14% in early trade, valuing it at approximately 11 billion Swiss francs.
Credit Suisse Radical Plan
The significance of dramatic market volatility and a social media backlash on Credit Suisse's operations were highlighted by the company's statement that clients withdrew money in recent weeks at a rate that caused the lender to violate some regulatory standards for liquidity.
In response to criticism from investors and to address shortfalls in its financial institution and after a slew of litigation expenses that have severely hurt profitability, the bank disclosed a significant reorganization of its operations. Ulrich Koerner, the new CEO, told news organizations on Thursday that it marked the start of a change into a new Credit Suisse (Radical Plan).
The Objective of the Plan
Credit Suisse's transformation plan calls for investment bank separation into a separate company named CS First Boston. The goal also includes raising 4 billion Swiss francs in capital through the issue of new shares and a rights offering and the establishment of a capital release unit to close down lower-return, non-strategic operations.
In addition, the bank announced a goal to devote nearly 80% of its resources to Wealth Management, Swiss Bank, Asset Management, and Markets by 2025. The objective of the restructuring is to lower risk-weighted assets and leverage exposure by approximately 40% throughout the process.
