Horta-Osório faces €4.6Bn Credit Suisse deep clean

The Portuguese banker and new President of Credit Suisse Group AG, António Horta-Osório is faced with the challenge of deep cleaning around €5.5Bn in debts from the troubled Swiss bank.

The debts have largely arisen because of reckless financial deals involving Archegos and Greensill Capital.
According to Executive Digest and Bloomberg, an internal bank inquiry suggests that Credit Suisse Group AG did not successfully or adequately monitor tens of thousands of millions of dollars that were channelled through the commercial exchanges of Archegos Capital Management which had minimum effects on the bank’s revenue results.
However, the report also reveals that the bank lost around €4.6Bn as a result of the collapse of the Bill Hwang family office.
“Credit Suisse lost money in deals that didn’t make sense and investments that were not very profitable,” states the document .
Credit Suisse has declined to comment on the report.
António Horta Osório has promised to run a fine tooth comb through the bank’s accounts and the financial mismanagement linked to Archegos and Greensill Capital.
“We should always try and face new challenges. If we don’t then we start to decline,” said Horta Osório in an interview with Bloomberg TV in April just days after replacing Urs Rohner at Credit Suisse.
In March the bank suffered an increase in losses of €4.4Bn Swiss francs (around €4Bn) which was, in part down to its business exposure to Archegos Capital Management, weeks after the implosion of Greensill Capital. Share dividends were slashed and share repurchasing was suspended and according to analysts, even more losses are on the way.
Over the past few months Credit Suisse shares have plummeted more than 20% and the bank is just completing a new strategic plan which could begin a major restructuring process in much the same way as occurred with both Caixa Geral de Depósitos and Novo Banco in Portugal over the past few years.
The newspaper ‘El Economista’ reveals that the board of directors fears that some investors or rather speculative opportunists will take advantage of the situation to launch a public offer which will result in the bank being broken up.
“Credit Suisse needs an immediate merger deal” an anonymous source at the bank told Reuters. “There is a growing concern in Zurich that investors will decide to move the goal posts. Either the bank organises a division of the local business, and here UBS would have a key role in the operation, or cuts will have to be made in preparation for a merger with a US bank.”