Credit Suisse Group rating downgraded by S&P | Investment News

ZURICH (Reuters) – Credit Suisse Group AG’s credit rating has been downgraded from BBB+ to BBB by Standard & Poors in a blow to the Swiss bank which reported a first-quarter loss and faces growing shareholder unrest following a series of scandals.

Its outlook has changed from negative to stable, the rating agency said.

Credit Suisse reported a first-quarter loss last month and launched a management overhaul after racking up billions in losses in 2021 from failed investments.

Investors expressed their dissatisfaction by rejecting the board’s proposal to relieve management of its debts for the 2020 financial year at the bank’s annual general meeting in April.

The bank attempted to reform its risk management culture after a series of costly scandals, which led to multiple management reshuffles, abrupt departures and internal and external investigations.

But S&P said a turnaround from scandals such as Archegos, Greensill and others would not be quick.

Credit Suisse was hit by two scandals in March 2021, when the implosion of US investment firm Archegos resulted in a $5.5 billion and $10 billion hit to its blockchain finance funds. (SCFF) linked to now insolvent UK financier Greensill have been closed. He is still working to recover assets from SCFF investors.

“Although the group is actively working on remediation actions, we believe that a lasting change in the culture of risk in such a complex global organization will take time,” the agency said.

“We now believe it will be even more difficult in a deteriorating economic and business environment.”

S&P said it views management’s goals to restore profitability as ambitious, especially in light of management upheaval and economic uncertainties.

“In our view, the group’s risk-reward ratio is likely to remain below that of its main competitors and other highly rated peers, at least over the medium term,” S&P said.

The ratings downgrade is widening the gap between Credit Suisse and its biggest rival, which has an A- rating with a stable outlook from Standard & Poor’s and an A+ rating with a stable outlook from Fitch.

Fitch has maintained Credit Suisse at a long-term A- rating with a negative outlook since April 2021.

The downgrade also puts Credit Suisse behind U.S. rival Morgan Stanley, which has a BBB+ rating with a positive outlook from Standard & Poors and an A rating with a positive outlook from Fitch.

UK bank Barclays has a BBB long-term rating from Standard & Poor’s with a positive outlook while its ‘A’ rating from Fitch also puts it above Credit Suisse.

(Reporting by John Revill and Brenna Hughes Neghaiwi; editing by Louise Heavens and Jason Neely)

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