We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Credit Suisse (CS) May Spin Off Asset Unit Over Greensill Scandal
Read MoreHide Full Article
Credit Suisse Group is considering separating its asset management unit from the rest of the bank as part of its efforts to cover the damages caused by the sudden collapse of supply-chain finance group, Greensill Capital.
Credit Suisse (particularly its asset management division) is grappling with the suspension of finance funds worth $10 billion related to Greensill. In a trading update provided recently, the bank said that of the $140 million worth of bridge loans that it had provided to Greensill, $90 million remain outstanding.
Notably, the funds that were offered were hyped as being safe. However, they contained investments tied to future sales of Greensill’s borrowers. Thus, as the funds are liquidated, investors have to face losses.
While Credit Suisse has returned $3.1 billion to investors, it has an additional $1.25 billion in cash across the four funds.
The bank’s CEO, Thomas Gottstein, is of the opinion that the scandal is a problem of the asset management unit.
Thus, Gottstein stated that separating the asset management unit is “potentially part of the plan”. He added, “Clearly, Greensill is a distraction and something that we are working through now but the operational results that we have in the first two months show we are on the right path.”
As the consequences of the scandal deepen, Credit Suisse is having to deal with litigation threats from investors, potential financial losses and regulatory scrutiny.
According to the company’s annual report, some unidentified fund investors have threatened litigation over the Greensill affair. Thus, the ultimate costs might be “material” to Credit Suisse’s operating results.
The report said, “The portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due. We might also suffer reputational harm associated with these matters that might cause client departures or loss of assets under management.”
Notably, as part of the changes made in order to deal with the mishap, Gottstein has already announced replacing the head of the asset-management unit, Eric Varvel, with Ulrich Koerner. Ulrich Koerner is an ex-executive of UBS Group AG (UBS - Free Report) . Per Gottstein, Koerner is the “exact right person” to revive the bank’s asset management unit.
Now, Koerner will report directly to Gottstein, while Varvel will continue to work alongside Koerner in the coming months and then focus on his other roles as CEO of the bank’s U.S. holding company and chairman of the investment bank. In addition to this, the compensation for a number of senior employees involved in the Greensill disaster has been put on hold.
Over the past six months, shares of Credit Suisse have gained 36.7% compared with 52.3% growth recorded by the industry.
Bank Of Montreal’s (BMO - Free Report) current fiscal-year earnings estimates have moved 33.2% upward over the past 60 days. Its shares have appreciated 51.3% over the past six months. At present, it flaunts a Zacks Rank of 1.
Barclays PLC (BCS - Free Report) has witnessed an upward earnings estimate revision of 5% for the ongoing year over the past 60 days. This Zacks #2 Ranked stock has gained 110.3% in the past six months.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Credit Suisse (CS) May Spin Off Asset Unit Over Greensill Scandal
Credit Suisse Group is considering separating its asset management unit from the rest of the bank as part of its efforts to cover the damages caused by the sudden collapse of supply-chain finance group, Greensill Capital.
Credit Suisse (particularly its asset management division) is grappling with the suspension of finance funds worth $10 billion related to Greensill. In a trading update provided recently, the bank said that of the $140 million worth of bridge loans that it had provided to Greensill, $90 million remain outstanding.
Notably, the funds that were offered were hyped as being safe. However, they contained investments tied to future sales of Greensill’s borrowers. Thus, as the funds are liquidated, investors have to face losses.
While Credit Suisse has returned $3.1 billion to investors, it has an additional $1.25 billion in cash across the four funds.
The bank’s CEO, Thomas Gottstein, is of the opinion that the scandal is a problem of the asset management unit.
Thus, Gottstein stated that separating the asset management unit is “potentially part of the plan”. He added, “Clearly, Greensill is a distraction and something that we are working through now but the operational results that we have in the first two months show we are on the right path.”
As the consequences of the scandal deepen, Credit Suisse is having to deal with litigation threats from investors, potential financial losses and regulatory scrutiny.
According to the company’s annual report, some unidentified fund investors have threatened litigation over the Greensill affair. Thus, the ultimate costs might be “material” to Credit Suisse’s operating results.
The report said, “The portfolio manager has been informed that certain of the notes underlying the funds will not be repaid when they fall due. We might also suffer reputational harm associated with these matters that might cause client departures or loss of assets under management.”
Notably, as part of the changes made in order to deal with the mishap, Gottstein has already announced replacing the head of the asset-management unit, Eric Varvel, with Ulrich Koerner. Ulrich Koerner is an ex-executive of UBS Group AG (UBS - Free Report) . Per Gottstein, Koerner is the “exact right person” to revive the bank’s asset management unit.
Now, Koerner will report directly to Gottstein, while Varvel will continue to work alongside Koerner in the coming months and then focus on his other roles as CEO of the bank’s U.S. holding company and chairman of the investment bank.
In addition to this, the compensation for a number of senior employees involved in the Greensill disaster has been put on hold.
Over the past six months, shares of Credit Suisse have gained 36.7% compared with 52.3% growth recorded by the industry.
Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Stocks to Consider
Bank Of Montreal’s (BMO - Free Report) current fiscal-year earnings estimates have moved 33.2% upward over the past 60 days. Its shares have appreciated 51.3% over the past six months. At present, it flaunts a Zacks Rank of 1.
Barclays PLC (BCS - Free Report) has witnessed an upward earnings estimate revision of 5% for the ongoing year over the past 60 days. This Zacks #2 Ranked stock has gained 110.3% in the past six months.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>