Credit Suisse's Largest Owner Asks For Sustainable Options For Troubled Investment Banking Unit

Credit Suisse's Largest Owner Asks For Sustainable Options For Troubled Investment Banking Unit
  • Bloomberg reported that Credit Suisse Group AG's CS largest shareholder had asked the firm to earn sustainable returns for its investment banking business or look for options, which has been the centerpiece of the losses over a couple of years.
  • In an interview, David Herro, the chief investment officer of Harris Associates, said, "it can't be fixed within the next year or two, then options such as a sale, spin-off or merger must be explored, he said.
  • "This has been a problem child," Herro, whose firm holds a 10% stake in the bank, said in a Bloomberg TV interview. "It sounds simple, but all they have to do is prevent the investment bank from losing money."
  • The bank seeks to rebound from years of scandals and losses related to the securities and trading unit. 
  • Last month it announced a strategic shift and singled out a key investment banking unit for possible changes as it reallocates capital.
  • "What we should have done then was sold it," Herro said. Instead, the firm bought more stock when the bank performed better than others during the 2008 financial crisis.
  • "You can't keep doing the same thing they have been doing over the last decade and get zero results," Herro said. "They have to put an end to it."
  • Price Action: CS shares are down 1.64% at $5.41 during the premarket session on the last check Friday.

Posted In: BriefsM&ANewsRumorsGeneral