Numerous small investors who in the last couple of months thought they were being particularly clever in greedily buying shares in beleaguered Credit Suisse are now suffering.
Instead of having bought at an all-time low, they see the needle stuck on the stock price. In all likelihood, they will have to prepare for an even longer lean period.
Lack of credibility
This is especially true after Credit Suisse again delivered bad news yesterday. Switzerland’s second-largest bank is threatened with further losses, customers are withdrawing their deposits and it is unclear how the company intends to make money going forward. Even among some of its most ardent supporters in the Zurich financial community, people are starting to worry about whether Credit Suisse can move on.
For now, there’s nothing to suggest that will happen, even with lavish sums of money flowing in from the Arab world, something many aren’t entirely comfortable with. Even in high finance, money alone is And money alone is not enough. One has to wonder if Credit Suisse still has enough of what is part of its name: credit. By close of business on Wednesday, shares closed at CHF3.62, slightly above the year’s low of CHF3.52.
What options remain?
Continuing to complain about the desolate state of the bank is not very productive. The question is what options does he still have. What magic the duo can do Axel Lehmann And Ulrich Koerner pull themselves out of their hats to put Credit Suisse back on the road to success?
In this context, the company is now at risk of lagging behind important developments and changes in the industry because it is still so absorbed in dealing with legacy issues. So what can be saved and preserved?
1. A forgotten Swiss bank
Since Saudi National Bank joined, Arab investors, together with former Qataris, own a quarter of Credit Suisse. If the former SKA (Schweizerische Kreditanstalt) wants to continue posing as a Swiss bank, it needs to get back to its roots as soon as possible, if that is indeed an option.
UBS also faced a reputational crisis 14 years ago, but managed to strike a deal with Switzerland Tourism and reaffirm its Swiss origins in various promotional campaigns. He published a hiking guide and invited people to go on boat trips. It worked, and nobody finds fault with UBS’s international equity base.
It is now crucial for Credit Suisse to play its Swissness. With Roger Federeralready has one of the best ambassadors of the Swiss brand.
2. Culture according to the motto: as long as it makes money
Neither Koerner nor Lehmann have commented on Credit Suisse’s culture in recent weeks. This raises the question of how much Swissness is left in the bank, especially since Swiss private banking was built on Swiss values.
Recently, the answer to that question turned out to be negative, as a lawyer Monica Roth he recently stated in an interview with «Neue Zürcher Zeitung». He said that a different set of rules seems to apply in the bank’s international affairs, with a different culture from the Swiss unit. Smaller offenses are punished in Switzerland, but international asset management, as long as it makes money, can get away with more.
One lawyer who has often been on the bank’s opposite side sensed a culture of arrogance at Credit Suisse that is very company specific. “Credit Suisse has been known to not consistently sign off on a statute waiver of litigation limits through 2021. It dragged out litigation until the other party ran out of money or opted out of resignation,” Roth said.
That said, Lehmann and Koerner should know where to start within their company. So far, no one has expressed this more clearly than Roth.
3. Presumably an entrepreneurial bank
Credit Suisse is an entrepreneurial bank in its origins since its foundation by Alfred Escher, one of the largest Swiss entrepreneurs. For a long time he remained like this. But with its rebellious course in recent years, a huge amount of credibility has been at stake, especially in the business world. When he invokes entrepreneurship today, he’s platitude at best.
Yet in its DNA it is an entrepreneurial bank. If he can win over some big Swiss and foreign entrepreneurs, he will have done a lot to rehabilitate the company.
4. Wealth management. The main activity
At a recent Investors’ Day in London, Credit Suisse meant well but handled things awkwardly. Naturally, it was important to eliminate legacy issues and to identify and spin off potential trouble spots. But this is by no means the end of the story. What it has failed to do is look forward, especially in its fundamental discipline of wealth management.
The bank owed everyone a vision of how it will make money in the future. General engagements with the richest people in the world are not enough to derive an innovative business model. This is especially revealing Francesco DeFerrari so far he has had little external involvement in Credit Suisse’s fresh start, mainly because he heads the flagship wealth management division.
The ideas and innovations on how Credit Suisse can maintain its position as one of the world’s leading asset managers in the future should come from him. But so far it hasn’t happened. How come?
5. Digitization: is there still something to do?
It is debatable whether digitalisation, the current buzzword in the financial world, is enough of a differentiating feature for a bank or simply a commodity for everything it builds. In the case of Credit Suisse, digitization would be an effective lever to distinguish itself as an innovative financial institution today.
But that hasn’t materialised, at least since the launch of the CSX app. Although the bank has a well-known expert in this field at the helm of its technology division in the person of Joan Hannaford. In a recent interview with finenews.asiarevealed, among other things, that Credit Suisse had already developed a kind of metaverse internally.
Such news alone would be worth its weight in gold to spark investors’ stock price imaginations. Conversely, Credit Suisse currently risks being digitally irrelevant.
6. Cryptocurrency Ranking – Now!
Countercyclical trading is an option in the financial world. Value Investor Warren Buffet he never tires of preaching about investing in widely despised assets at any given time.
So why doesn’t Credit Suisse also position itself as a crypto bank by offering a suite of services in this environment and taking a pioneering role in blockchain technology? The know-how is certainly there and the bank could attract a completely new clientele, including quite a few entrepreneurs, indeed many HNWIs (High Net Worth Individuals) of tomorrow.
7. A Furious Duo and What Else?
It may be that Credit Suisse’s biggest problem is very trivial and the fact that the bank’s restructuring is based on two less than charismatic individuals in Lehmann and Koerner, both experienced bank managers. But that alone is no longer enough in today’s world. It is rather surprising that the whole launch of the “new Credit Suisse” is so focused on two people. It contradicts all contemporary management principles, which must put the team first.
So far only Lehmann and Koerner have been mentioned. But what are the other members of the Group Executive Board doing? Isn’t it time to focus on them too, especially since Credit Suisse replaced more or less the entire management team within a year and should now be made up of absolute experts without exception? Investors want to hear more than just the assurances of two lone warriors who haven’t been entrusted with the big change.