Tired of the constant stream of negative headlines and disappointing quarterly results? Credit Suisse’s most stalwart investor The scandal-plagued bank has been abandoned for two decades.
Harris Associates’ David HerroHe owned one-tenth the Zurich-based financial institution as Recently as He began to decrease his holdings last Sunday, as he announced on Sunday. in After much patience, he finally sold everything in October.
Speaking to the Financial Times, the firm’s chief investment officer explained in What little faith he had, he was beaten to death in the bank’s management.
“There is a question about the future of the franchise,” Herro mentioned the $119 billion Swiss Francs. in assets drained from its wealth management business, the bank’s cash cow, during the final quarter of last year.
Herro is an exception to the rule. He has a very short investment time horizon, as money managers are not known for having long term goals. in The industry. He remained loyal to the bank, with one exception in 2009 and 2008, ever since his first large job two decades ago.
However, Credit Suisse Market confidence was impacted by numerous self-inflicted wounds. These include a $5.5 billion exposure to imploded hedge fund Archegos, and selling an investment fund stuffed with assets originated and packaged by bankrupt firm Greensill Capital that could cost clients an estimated $2.6 billion in Losses at the last count
The financial institute is currently on its third pair of chief executive and board chair in It took only three years. The latest CEO, Ulrich Körner, joined the ranks of his predecessors when he unveiled yet another strategic restructuring plan last October.
Last month he was forced to reveal the bank’s annual net loss attributable to shareholders reached its highest since 2008Ballooning 7.3 billion francs A loss of approximately 1.7 million in The previous year.
Herro announced Monday that the company had been sold. “lots of other options” for investing its clients’ funds now that rising interest rates are buouying a lot of European peers.
“Why go for something that is burning capital when the rest of the sector is now generating it,” He continued, citing another investment. in peers like Italy’s Intesa Sanpaolo or BNP Paribas of France, among others.
It is a bank counter ‘laser focused’ Implementing its most recent restructuring plan
However Credit Suisse It was rumored to be facing an attack from a terrorist group at the beginning of October. “Lehman moment”—catalyst for the exodus of client capital to which Herro referred—other banks were recovering from earlier troubles.
Commerzbank, an insolvent German lender posted its last month’s results. highest annual net profit since 2007 Thanks to the rising net interest revenue
Herro also critiqued terms that he found unfavorable the carve out of investment banking arm, Credit Suisse First Boston and the sale of its securitized products Business to private equity.
“We feel the plan to restructure the investment bank, while a noble cause, is cumbersome and far more costly in terms of cash burn than we expected,” Herro said. “We were also not satisfied with what we were getting in terms of proceeds…from the sale of securitised products.”
Contacted by The Sunday Review, Credit Suisse Its decisions were defended as These are the following “clear strategic objectives” The company argued that the latest plan had been implemented more quickly than was originally scheduled.
“We are laser focused on successfully executing our plan and on progressing toward our targets to ensure new Credit Suisse delivers sustainable value for all our stakeholders,” You can read it here in On Monday, a written statement was required.
Credit Suisse’s results, while poor, did not dissuade other value investors speculating the stock’s recent plunge offered an attractive entry point from a risk-reward perspective. Saudi National Bank is an example. acquired a 10% stake in Zurich loaned approximately 1.8 Billion Francs in the final year.
With a total of 2.2 billion Francs rights issue in In the fourth quarter of the year, the lender was in a position to fill a hole in After booking a charge of 3.7 billion Francs to write down tax losses that it had previously hoped to keep forward, the company’s balance sheet was ripped open.
On Monday shares traded in trading in Credit Suisse fell 2.6% lower in Zurich trades at 2.71 Swiss Francs. This is close to the all-time lowest level last week.
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