For now, there is little to suggest that Credit Suisse will be able to pull out of its spiral in the foreseeable future. That's all the more reason to call for alternative scenarios to its recently adopted strategy.
Credit Suisse Chairman Axel Lehmann harbors a bold expectation. He believes sooner or later, at least some of the client money that has flowed out of the bank this year will come back as he stated at a «Financial Times» event in London this week.
What gives him such confidence is not apparent. There is nothing to suggest that the billions of client assets flowing out of the bank in recent months will return anytime too to the bank. On the contrary, Credit Suisse finds itself in a continuing downward spiral, with new rumors further complicating the situation.
New Arguments
This is tarnishing the company's reputation and, sooner or later the question will be asked whether only Credit Suisse's Swiss business will survive on the market. JP Morgan financial analyst Kian Abouhossein provided new arguments for this thesis.
He estimates the market value of the Swiss unit at around 14 billion francs. The market capitalization of the entire group is currently about 11 billion francs, leaving a Swiss bank without investment banking and some other divisions more valuable than the whole.
Enormous Legal Risks
If the desolate situation of the Credit Suisse Group continues, an IPO would be a logical step from a business point of view. That is a stronger argument than a takeover of Credit Suisse in its entirety by a rival bank, as has been rumored. From a purely financial point of view, a Swiss bank would be a bargain for a foreign institution.
The imponderables of such a step remain considerable since the bank is still exposed to enormous legal risks that could be the undoing of a potential buyer. Moreover, the likelihood of success of the new Credit Suisse strategy is still unclear, and the integration costs into an even larger entity would not only be daunting but would also paralyze the operations of the merged entity for months.
Financial Center Benefit
There is every reason to believe that Credit Suisse will sooner or later try to make the Swiss bank independent, which would restore the trust of clients and investors. But that trust can hardly be seen since Credit Suisse launched its new strategy at the end of October. Still, several influential voices have said that two big Swiss banks are far better for the financial center than just one.
The question is, what will the second one look like in a year?
