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Credit Suisse Comeback Challenge Seen in Three Charts of Woe

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(Bloomberg) — Credit Suisse Group AG is struggling to restore confidence in its battered brand, with investors so far showing little optimism that last month’s strategy revamp will succeed after years of scandals and mismanagement.

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The following charts show three fronts critical for the Zurich-based bank’s turnaround — and on all, the bank continues to face difficulty. The share price hit an all-time low Tuesday, the cost of default insurance is spiking again, and the wealthy clients the lender relies on continue to pull out their money.

Read More: Credit Suisse Saw $88 Billion Outflows as Confidence Slumped

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With another loss looming for the final quarter of the year and a $4 billion capital raise under way that dilutes the holdings of existing shareholders, Credit Suisse is counting on the patience of investors and staff as the benefits of restructuring take time to arrive. Chief Executive Officer Ulrich Koerner has set 2024 as the year the bank will “definitely” be profitable again.

Credit Suisse shares opened higher Wednesday after hitting a low of 2.90 Swiss francs ($3.0417) on Tuesday, with the shares on track for their longest losing streak since October 2007. The stock has fallen 18% since the bank announced massive outflows from wealth-management clients last week. The downward trend means Credit Suisse is no longer Switzerland’s second-largest bank by market capitalization, slipping behind wealth manager Julius Baer Group Ltd.

The current drop is however also being influenced by the ongoing capital raise via rights issue. The first day of trading for the new shares is expected to be Dec. 9, potentially alleviating some of the downward pressure on the shares.

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Downgrades of Credit Suisse debt by ratings companies have been weighing on customers’ comfort levels in doing business with the bank. They have also raised the cost of borrowing, and the price investors pay for insurance against default. Credit default swaps for the bank’s senior debt had already risen to the highest since the financial crisis in early October amid persistent rumors over the bank’s stability, and hit another record on Tuesday.

Read More: Credit Suisse Cut to One Level Above Junk Status by S&P

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The bank issued a US bond yielding over 9% in early November, as well as a euro bond paying a coupon of just below 8%. The rate was the second-highest ever for a new senior investment-grade bank deal in euros.

Read More: Credit Suisse Forced to Pay Junk-Level Yields for Cash Infusion

The terms could continue to worsen if Credit Suisse receives another credit rating downgrade as two firms — Moody’s and Fitch — have negative outlooks on the bank, with both currently putting it two notches above junk. A downgrade could be triggered if it can’t stem the client outflows, Moody’s said in a rating decision earlier this month.

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Credit Suisse is on a campaign to rebuild trust in the wake of the outflows. Executives said last week that the withdrawals from wealth management have stabilized but not reversed since October.

Nevertheless, hundreds of wealthy customers in Asia have sought to place their funds with rival Swiss lender UBS Group AG in the region amid the turmoil, and the bank is planning to re-allocate staff to handle these expanding accounts, people familiar with the matter earlier told Bloomberg. Morgan Stanley is also among banks benefiting from the historic outflows at Credit Suisse.

–With assistance from Jan-Patrick Barnert and Allegra Catelli.

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(Updates with shares)

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