Moody’s downgrades some senior unsecured debt and deposit ratings of Credit Suisse

ZURICH, July 13 (Reuters) – Rating agency Moody’s downgraded some of the senior unsecured debt and deposit ratings, claiming that the risks associated with the Archegos and Greensill cases would require significant resources to resolve.

Switzerland’s second-largest bank was forced to liquidate $ 10 billion in funds linked to the collapse of supply chain finance company Greensill, then suffered billions in losses after the Archegos family office imploded.

“As indicated by similar cases in the past, investigating and resolving these issues will likely consume a significant amount of banking and managerial resources and take time to resolve, during which CS will remain vulnerable to risk factors. aforementioned, “the rating agency said.

Credit Suisse declined to comment.

Earlier this year, S&P and Fitch both revised Credit Suisse’s outlook to negative following the Archegos and Greensill scandals.

Moody’s on Tuesday downgraded its senior unsecured long-term debt and Credit Suisse AG deposit ratings by a notch to A1 instead of Aa3, pointing to weaknesses in the bank’s risk management.

Credit Suisse AG is a sub-entity that hosts the main operations of the bank, including its investment banking and wealth management activities.

A review of the framework also reduced Moody’s opinion on Credit Suisse AG’s ability to absorb unexpected losses, the rating agency said.

Moody’s confirmed the Baa1 ratings on long-term senior unsecured debt for Credit Suisse Group as a whole, and said the outlook for Credit Suisse ratings is now stable.

The rating agency also said it expects the bank to be able to contain other possible reputational effects and does not expect any strategic adjustments to significantly harm the bank’s reputation. ability of Credit Suisse Group to meet its medium-term profitability targets.

Nonetheless, the agency pointed to potential additional financial strains related to the Archegos and Greensill cases, as well as the potential for customer defections and franchise depreciation as a source of concern in its demotion from Credit Suisse AG.

“Although Moody’s anticipates that CS will improve its governance and risk management practices, including the implementation of recommendations resulting from internal and external investigations, the extent and effectiveness of these measures will remain uncertain for some time. “Moody’s said.

“Further, the final financial and reputational implications of the aforementioned events for CS also remain unclear.”

Reporting by Brenna Hughes Neghaiwi Editing by Riham Alkousaa, John Revill and Jane Merriman

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