It could prove fatal for Switzerland's second-largest bank if negotiations collapse this weekend as it will face constant fire from now on, finance expert Beat Wittmann tells finews.asia.
Credit Suisse will have a tough time surviving should the merger talks that are ostensibly taking place with UBS end unsuccessfully.
Former UBS and Credit Suisse banker Beat Wittmann (image below) told finews.asia that it will remain on the backfoot because of the precipitous decline in its share price, rising prices for Credit Default Swaps (CDS), tighter counterparty credit limits, and client outflows – not to mention heightened regulatory scrutiny in New York, London and Frankfurt.
Years of Mismanagement
Beat Wittmann, Porta Advisors (Image: zvg)
The founder and CEO of the Zurich-based finance boutique Porta Advisors said that any kind of deal must involve a sale or disposal of the investment banking operations and continuation of the domestic Swiss business.
Wittmann emphasized: «After years of mismanagement and an epic destruction of market and shareholder value, Credit Suisse has only itself to blame for its downfall.»
Increasing Finma Pay
«Another lesson we should take from this is minimizing investment banking activities and raising capital requirements,» Wittmann continued. He says Finma will have an enormous amount of work ahead of it.
«It will be about making sure interests are aligned when it comes to compensation to make sure that the structurally underfunded Swiss regulatory authority is in a position to fulfill its duties, Wittmann emphasized.
