Reuters reports that the Swiss National Bank has urged Credit Suisse to improve its capital strength by halting dividends or issuing shares to raise cash to shield it from the risk of an escalation of the euro zone banking crisis.
Bloomberg reports that Huw van Steenis, a London-based analyst at Morgan Stanley, said: 'Credit Suisse’s over-optimism on organic earnings means they are now at the low end of all global wholesale banks on a Basel III basis'. To boost capital ratios the firm is likely to shed 'far more' risk-weighted assets at the investment bank, as suspending dividend 'would not be substantial enough in the adverse scenario', he added.
The news organisation also reported that Credit Suisse shares had dropped over 9% by midday Thursday, to a 20-year low.
Credit Suisse said that it 'has been at the forefront' in adapting to regulatory change and attaches the 'highest priority to an industry-leading capitalization'. The firm also said that it 'has also established transparency on its plan for both building up common equity through retaining earnings and further asset reduction'.
Societe Generale recently downgraded Credit Suisse to 'sell' from 'hold', saying that the Swiss firm remains heavily leveraged and adding that expectations on investment returns and a subsequent increase in assets under management at the Swiss bank are still too high.
In the meantime, The Financial Times reports that the non-Americas Bank of America Merrill Lynch wealth unit sale is progressing, with Credit Suisse, Bank Julius Baer, UBS and Wells Fargo all thought to be in the mix to acquire the business.
Finally, Bloomberg reports that Morgan Stanley has named Leo Civitillo and Claus Skrumsager as global co-heads of fixed-income underwriting, three months after the U.S. leader of the unit was arrested, according to a person briefed on the decision.
Civitillo and Skrumsager will report to Raj Dhanda, head of global capital markets at the New York-based bank, said the person, who declined to be identified because the appointments weren’t made public.
William Bryan Jennings, Morgan Stanley’s U.S. bond-underwriting chief, was arrested in February, accused of stabbing a New York cab driver over a fare. He pleaded not guilty March 9. The firm said that month that Jennings has been put on leave.