Credit Suisse’s new chair has his work cut out dealing with crises

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Antonio Horta-Osorio can shrink the balance sheet, sell parts of the business or merge with UBS Group

Berlin/Singapore/London — The damage control at Credit Suisse Group from a pair of disasters that stunned the banking world will soon give way to the question of how the 165-year-old institution will rehabilitate its business and reputation.

With a Sf4.4bn writedown tied to its losses from Archegos, the fallout from the collapse of Greensill Capital, and a dividend cut and suspension in share buybacks, frustrations among stakeholders are boiling over. Speculation is rife over the future of the investment bank, the asset management unit, and the fate of top executives.

Horta-Osorio’s initial decisions could depend on whether the Swiss regulator, Finma, requires Credit Suisse to hold more capital against its credit or operational risks, as it did after UBS lost about $2bn on unauthorised trades by London-based trader Kweku Adoboli a decade ago. Bankers were running the numbers on Credit Suisse as a potential acquisition target even before the Archegos fallout. Deutsche Bank could explore a deal to create a European investment banking champion with one of the biggest wealth managers in the world. BNP Paribas, one of the few European banks able to do a deal, could scale up quickly in Asia while expanding its investment banking business.

 

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