There is little more than a month to go until the strategy update on 27 October and there are already many questions. Among them are whether the details will remain confidential – and if the bank realizes its only viable future lies in becoming entirely Swiss.
Shares of Switzerland's second-largest bank fell 20 percent last week. That has never happened before, and it is undoubtedly a matter of concern. Credit Suisse shares are now worth $4 dollars each and its market valuation stands at $11 billion.
Almost everyone knows that it has deep problems. The only question is how it can get out of the current debacle.
Under the Radar
Until now, there haven't been any indications that it will be able to stage any kind of recovery in the medium term. On the 27th, it wants to present a new strategy. But it is a long time until then. Rumors and speculation are rife and although many of them have some entertainment value, they are also incredibly damaging. Just look at the share price.
Senior management thought they could fly beneath the radar until the end of October. That was naive and illusory, to say the least. The Anglo-Saxon media has been reporting for days what senior management has been ostensibly discussing at the top. But the bank thought, again naively, that it could quell all speculation with repeated denials, sweeping everything under the rug.
Sudden Step
But that strategy has just prompted more rumors. It is going to revive the «First Boston» name. The investment bank will be split into three. Another capital increase looms. Everything is going to be put under the Credit Suisse brand, whatever that means, as a way of getting past everything.
At the outset, the bank thought it could keep itself out of trouble by not commenting on all the speculation. Now it must realize that it is impossible. That must be why it took the sudden step of clearly denying it was exiting the US market, even if doing so was against its principles.
Risky Situation
The predator has become prey, and now it has no choice but to react to external pressure. That puts it in a risky situation if it wants to be in a position of being able to present a new strategy convincingly in about five weeks. It certainly won't make things easier.
Another thing is also becoming increasingly clear. The leaks generating headlines originate in the English-speaking media. In other words, newspapers such as the «Financial Times» and the «New York Times» or the «Bloomberg» and «Reuters» news agencies. They always seem to be the source of confidential information.
There is only one way to think about that. It is the top UK and US executives at Credit Suisse, who are not as loyal to the company, who are regularly leaking information to the media, for whatever reason.
True Swiss Bank
That is the other side of the coin for the US-managed side of the bank, which has been at the root of so many of its problems. If it is indeed true that it is looking at a capital increase, it is likely courting large American investors who have the necessary funds. That makes the recent, destabilizing indiscretions far less surprising given they ostensibly come from very well-informed individuals.
The declining market value just makes them more attractive to new investors.
We are still more than a month away from the expected announcement. There are clear questions as to whether the bank can manage to keep everything confidential until then. But maybe it is enough time for Credit Suisse to finally realize that its only realistic future is as a purely Swiss bank.