Media: is the CHF50bn Credit Suisse lifeline just a ‘sticking plaster’?

The Swiss National Bank has agreed to lend up to CHF50 billion to Credit Suisse to shore up its liquidity and restore investor confidence. © Keystone / Ennio Leanza

Credit Suisse and its top managers have received sharp criticism from the press over their latest financial problems. The ailing Swiss bank must urgently win back trust that has been broken, they conclude.

“Operation successful, patient weak but stable for the time being,” wrote the Neue Zürcher Zeitung (NZZ) on Friday.

On Thursday it was announced that Credit Suisse would borrow up to CHF50 billion from the Swiss National Bank (SNB) to bolster liquidity and reassure investors after its shares slumped massively on fears of contagion from a banking crisis in the United States. The Zurich-based bank, with deep roots in Swiss business and society, is in the middle of restructuring after a string of scandals, losses and management upheavals.

The trust of customers and investors is now decisive for the survival of Switzerland’s second-biggest bank, said NZZ.

+ Credit Suisse rescue: What does it mean for Switzerland?

“Credit Suisse has shaken this trust with its series of scandals and embarrassments over the years,” it said.

For the Tamedia group, the fact that Credit Suisse had to be rescued by the SNB is extremely annoying but necessary “to free itself from the downward spiral”.

The bank now finds itself in an “existentially threatening crisis of confidence, which it is fuelling via untrustworthy communication”.

Top management

The problem is with the current leadership – chair Axel Lehmann and CEO Ulrich Körner – who are unable to do much about the loss of trust, according to NZZ. “Credit Suisse is missing a figure who can bring back the belief in a turnaround for the better, both inside and outside the bank,” said the paper.

+ Where did it all go wrong for Credit Suisse?

Blick newspaper also has doubts about the two top managers: “They don’t have a vision or concrete plans for how the lost assets will one day find their way back to Credit Suisse.”

The Südostschweiz newspaper said the intervention by the Swiss central bank had certainly sent a “strong signal”. But Credit Suisse is not off the hook.

+ Credit Suisse to borrow up to CHF50 billion from Swiss National Bank

“As long as Credit Suisse cannot stop the outflow of client money and convince investors that it has learned the lessons of past mistakes with its new business model, it will remain vulnerable – and a plaything of the markets,” it wrote.

Future scenarios

“Will this [SNB] support be enough to allow the bank to stabilise and complete its ongoing restructuring? Or is it just too late?” asked the French-speaking Le Temps newspaper. It suggested four possible scenarios going forward: a status quo with a successful restructuring, which was announced last October; a new cash injection; the breaking up of the bank into profitable units; and a possible merger with UBS or another bank.

+ ‘An untenable equity story’: what’s next for Credit Suisse?

In an editorial on Friday, the Financial Times said Credit Suisse had fallen “prey to a crisis of confidence”.

Despite prudential banking rules, Credit Suisse had slipped up “again and again”. Credit Suisse’s problems stem from its franchise rather than its balance sheet, the FT said.

“It is unclear whether the [SNB) support will be more than a sticking plaster in the longer term… investors are still to be persuaded about Credit Suisse’s overall strategy, or even to see much detail of a restructuring that so far has been too murky, costly and indecisive,” it wrote.