Credit Suisse cut by Fitch in latest ratings downgrade
ZURICH, Aug 5 (Reuters) - Fitch Ratings has cut Credit Suisse Group's CSGN.S long-term issuer default rating one notch to 'BBB' with a negative outlook, the latest downgrade for the embattled Swiss bank.
Moody's lowered its ratings and S&P took a harsher view of the bank's prospects this week as Credit Suisse tries to stem losses and regain its footing under a new CEO.
Fitch cited Credit Suisse's new strategic review and a big second-quarter loss, which it said highlighted the challenges to stabilise the bank's performance and generate adequate profitability from its wealth management franchise.
The strategic review was likely to result in "material restructuring charges at a time when the bank's weak performance limits internal capital generation", it said late on Thursday.
Fitch's negative outlook reflects its view that a further restructuring plan would give rise to significant execution risk, particularly if it requires material costs given the Zurich-based bank's weak earnings generation.
"Failure to stabilise the business model, to improve operating profitability or to meet the commitment to maintain a common equity Tier 1 (CET1) ratio of at least 13% would be negative for ratings," it added.
Credit Suisse has named asset management boss Ulrich Koerner as its new chief executive, tasking him with scaling back investment banking and cutting more than $1 billion in costs.
The move comes after Credit Suisse suffered billions in losses last year, including a $5.5 billion loss on the default of U.S. family office Archegos Capital Management and the shuttering of $10 billion of supply chain finance funds linked to collapsed British financier Greensill.
The bank says it is well capitalised and will emerge stronger from the revamp.
Shares in Credit Suisse, down more than 40% this year, were indicated little changed in pre-market activity.
Reporting by Michael Shields; Editing by Alexander Smith
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