Many words can be found to describe the precarious state of Credit Suisse (CS).

But a quick look at the share price of the major Swiss bank is enough.

This has been in free fall for months.

And on Monday there was another severe setback: the course fell by 7 percent to CHF 3.70 over the course of the day.

The share certificate of the former figurehead of the Swiss financial sector is now worth less than an espresso in downtown Zurich.

The price has more than halved since the beginning of the year.

The stock market value has fallen to 10 billion francs (10.4 billion euros).

In March 2021 it was three times as high.

John Knight

Correspondent for politics and economy in Switzerland.

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As a reminder, CS has staggered from scandal to scandal in recent years.

The spy affair of former CEO Tidjane Thiam was followed by questionable investment deals with the collapsed financial services provider Greensill and billions in losses from uncontrolled lending to a New York gambling den called Archegos.

In addition, there were numerous costly legal disputes as a result of suspected or proven misconduct on the part of our own employees.

The associated loss of trust also had a negative impact on the core business of wealth management: Rich customers stayed away from the bank or turned their backs on it.

The bank closed the second quarter of 2022 with a loss of CHF 1.6 billion.

As a result, the Swiss Thomas Gottstein had to hand over the leadership of CS to the German Ulrich Körner at the beginning of August.

Working shoulder to shoulder with the new Chairman of the Board of Directors, Axel Lehmann, who was installed at the beginning of the year, the former management consultant is working on a new strategy that should finally get the ailing bank back on track.

On October 27, Körner and Lehmann want to present their plans for the restructuring of the group, which is likely to be accompanied by severe cuts for the workforce.

Due to a lack of concrete facts, there has been lively speculation within and around the bank for weeks about possible measures such as a partial withdrawal from investment banking and the departure from certain regions of the world.

This causes great unrest and uncertainty among the more than 50,000 employees.

This, in turn, depresses morale and spirits – and can tempt the best people to look elsewhere for work.

Therefore, at the end of last week, Körner felt compelled to calm down his workforce.

In an internal memo available to the FAZ, the CEO thanked his people for their "great commitment" and "hard work".

There is no doubt that the markets and the press would be making even more noise by the end of October, he writes, concluding: "I can only advise you to remain disciplined and to stay as close as possible to your customers and colleagues.

I know it's not easy staying focused with the many stories you read in the media, especially when you consider the amount of factually inaccurate statements being made.

However, I hope that you will not confuse our daily share price performance with the bank's strong capital and liquidity position.”

Conversion possibly accompanied by capital increase

With the latter sentence, Körner certainly also wanted to deprive the rumors about an allegedly impending liquidity bottleneck spread via social media.

Such prophecies of doom are irresponsible, the bank said on Monday, referring to a core capital ratio of 13.5 percent at the end of June, which was within the target range of 13 to 14 percent.

According to Andreas Venditti, analyst at Bank Vontobel, the current wave of rumors and the associated stock market sell-off are fueled by speculators who would have bet on a falling CS price.

At the same time, Venditti also believes it is increasingly likely that Credit Suisse will flank its restructuring with a capital increase.

Specifically, he expects an increase of CHF 4 billion.

Fear of a severe dilution of their shares had already driven many investors to exit CS in the past few weeks.

In bank circles, on the other hand, it is emphasized that capital can also be released or brought on board by selling individual business areas (such as the securitized products division).

Credit Suisse is desperately looking for buyers

One thing is clear: In view of the record-low share price, management will try everything possible to get by without a capital increase.

However, Venditti points out that negotiations about the sale of business units are very difficult in the current phase: Every potential investor knows that CS is desperately looking for buyers.

That puts pressure on prices in a market environment that is not exactly favorable anyway.

Moreover, a radical conversion initially costs a lot of money.

"You pay severance pay at the beginning, but the costs only go down over the years," says Venditti in an interview with the FAZ. The analyst recalls that the unit once used by Tidjane Thiam to process sorted and rotten deals from 2015 to 2018 made losses of 12 brought in billions of francs.

Venditti does not expect a "white knight" to come and help CS.

The effort to clean up at the bank is simply too great.

"No one will buy that from Credit Suisse." The top management of the bank is not looking for a (strong) partner at all.

They want to remain independent and bring the house on course under their own steam, it says on Paradeplatz.