text/"Tsinghua Financial Review" senior editor Sun Shixuan
Recently, the share price of Credit Suisse has dropped sharply. Coupled with the sharp rise in Credit Suisse's credit default swap (CDS) prices, it has further concerns about the prospects of Credit Suisse, and the noise in the market has begun to increase. However, judging from the performance of some regulatory indicators, people's concerns about Credit Suisse seem to be overly concerned.
ranked 494th in the 2022 Fortune 500 rankings of the Fortune (The Fortune ), which has dropped by more than 100 places from its position in the 2021 Fortune 500 rankings (378th).
Credit Suisse Group ranked 360th in the Fortune World 500 rankings in 2019 and 357th in the Fortune World 500 rankings in 2020.
Once upon a time, in 2001, Credit Suisse Group ranked 38th in the Fortune World 500 rankings.
20 years, Credit Suisse's position on the top 500 rankings has changed dramatically.
There is a reason for Credit Suisse Group's sharp decline in the Fortune World 500 rankings in recent years.
In 2021, Credit Suisse Group's net loss attributable to shareholders reached 1.65 billion Hz6 Swiss francs , while its net profit attributable to shareholders in 2020 was 2.669 billion Hz.
Credit Suisse Group was founded in 1856 and is headquartered in Zurich, Switzerland. Its business areas cover four major businesses: wealth management, investment banking, Swiss banking, and asset management. It has business activities in about 40 countries around the world.
Credit Suisse AG, a wholly-owned subsidiary of Credit Suisse Group, is a world's top financial services organization.
In late March 2021, the U.S. family office Archegos Capital Management Company (Archegos) liquidated its position. Archigos was forced to close his position because he failed to make up for the trading margin in time, which caused huge losses to Archigos itself. international financial institutions such as Credit Suisse and Nomura Holdings, which provided financing to Archigos, were also in a quagmire. Among them, according to the financial report of Credit Suisse Group, Credit Suisse incurred a net fee of 4.8 billion Swiss francs in 2021 regarding the Archegos incident.
2021 was a "very disappointing and challenging year" for Credit Suisse. To meet the challenges, Credit Suisse has made some business and personnel adjustments, and looks forward to 2022 as a transition year for the group.
However, things went against my expectations. In 2022, Credit Suisse Group's losses have increased. According to the financial report, Credit Suisse Group's net loss attributable to shareholders in the first quarter of 2022 was 273 million Swiss francs, and its net loss attributable to shareholders in the second quarter of 2022 was as high as 1.593 billion Swiss francs, and its net loss attributable to shareholders in the first half of 2022 totaled 1.865 billion Swiss francs, which is already higher than its net loss attributable to shareholders in the whole year of 2021.
In June 2022, according to the Financial Times, the UK Financial Conduct Authority (FCA) stated in May that Credit Suisse has been included on the watch list of institutions that need to strengthen supervision.
's stock price has fallen sharply recently, and the sharp rise in Credit Suisse's Credit Default Swap (CDS) price has further concerns about the prospects of Credit Suisse, and the noise in the market has begun to increase.
Figure 1: Stock price trend of New York Stock Exchange Credit Suisse Group (CS)
Source: New York Stock Exchange
Credit Suisse Group is not an ordinary financial institution. It is not only huge in scale and extensive business, but also an global systemic importance bank .
According to the latest global systemically important bank list released by the Financial Stability Council in 2021, there are 30 global systemically important banks. Credit Suisse Group is in the lowest first group, and the additional capital requirement of 1% is applicable.
Judging from the performance of some regulatory indicators, people's concerns about Credit Suisse seem to be a bit over-concerned.
At the end of June 2022, Credit Suisse's common stock Tier 1 capital (CET1) adequacy ratio was 13.5%, lower than 14.4% at the end of last year and higher than regulatory requirements.
At the end of June 2022, Credit Suisse's liquidity coverage rate reached 191%, although it was still at a high level, although it was lower than 203% at the end of last year and 196% at the end of the first quarter of 2022.
At the end of June 2022, Credit Suisse's high-quality current assets accounted for 32.3% of total assets, significantly higher than the peer average.
Figure 2: Credit Suisse Group's liquidity coverage rate
Source: Credit Suisse Group's second quarter 2022 performance report
Of course, these data are the time point data that shows Credit Suisse's past performance. As the situation changes, the data will continue to change. What will Credit Suisse go in the future remains to be seen.
As usual, in November 2022, the Financial Stability Council will release the latest list of global systemically important banks. People will wait and see.
