Credit Suisse releases ‘worrying’ outlook showing asset loss ‘well above’ expectations – Credit Suisse Group (NYSE:CS)

Embattled shareholders Credit Suisse Group CS on Wednesday approved a proposal to issue new shares. The Swiss bank’s turnaround plans don’t look good enough in the near term, however, as investors shun the name after management disclosed a worse-than-expected situation. outlook for the fourth quarter.

What there is to know: Credit Suisse expects to report a “substantial loss” in the fourth quarter of up to around 1.5 billion francs ($1.59 billion), due to the rapid rollout of its previously announced announcement. strategic transformation plans.

“These decisive steps should result in a radical restructuring of the Investment Bank, accelerated cost transformation and reinforced and reallocated capital, each progressing at its own pace,” said Credit Suisse.

In early October, shares of Credit Suisse fell on reports that the lender could be struggling with liquidity problems.

The Swiss bank credit default swapswhich provide investors with financial risk protection and essentially measure how well a company financial health is perceived by the market, has soared recording levels.

Credit Suisse then announced plans to transform its investment bank into a small-cap, advisory-focused and more market-focused banking business.

On Wednesday, Credit Suisse said it was implementing its strategic commitments to strengthen its balance sheet and reduce risk by proactively engaging clients and accessing markets. The bank said it recently issued about $5 billion through two bond sales. Credit Suisse shareholders also voted to approve the capital increases at an extraordinary general meeting on Wednesday.

Related link: Struggling lender Credit Suisse reports massive fourth quarter loss as it ramps up recovery plans

Why is this important: Credit Suisse said it began experiencing deposit and net asset outflows in early October at levels well above rates incurred in the third quarter.

“At the group level, as of November 11, 2022, net asset outflows represented approximately 6% of assets under management at the end of the third quarter,” Credit Suisse said.

Lower deposits and assets under management are expected to lead to lower net interest income and a loss for its wealth management business in the fourth quarter.

Credit Suisse has previously said it expects a fourth-quarter loss, but it didn’t give numbers on its expectations until this week.

David Faberco-host of CNBC’s “Squawk On The Street,” called the company’s updated outlook “regarding” the show Wednesday morning.

“Partly because the loss of business assets was, people familiar with the situation told me, well above what had been expected,” Faber said.

CS Price Action: Credit Suisse has a 52-week high of $10.56 and a 52-week low of $3.70.

The stock was down 6.11% at $3.84 on Wednesday afternoon, according to BenzingaPro.

Photo: Kecko from Flickr.