Credit Suisse?

CS? Bottoming on the European Debacle. Financially sound. Little at risk with regard to defaults in the PIIGS. 4% DIVI in a world of 1.5% 10y yields. What am I missing.

Long term play or insanity?

 

S & P:

We look for EPS of $2.74 in 2012, $3.79 in 2013 and $4.05 in 2014.

➤ CS has seen steady net inflows in its Wealth Management business, but the investment banking business has been hurt by recent headwinds. Cost cutting should help alleviate some pressure on the bottom line, but may cause near-term distractions, in our view. With a focus on its equities business, we believe the bank should be well positioned when financial markets eventually improve.
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Parsed for those interested in Credit Suisse:

After the SHTF CS will be in an enviable position.

Add when appropriate during market weakness and hedge downside risk with options and to boost return.

 

Down 10%. SNB says "reduce Dividend" to shore up reserves although exposure to PIIGS is minimal likely slowdown in revenues due to Euro turmoil could have impact.

CS---no comment.

 

Credit Suisse Plunges to 9-Year Low as SNB Tells It to Bulk Up
By David Benoit @ Bloomberg

Switzerland must have been listening to Jamie Dimon’s Senate appearance yesterday.

The day after U.S. senators and Dimon all but sanctified the need for banks to hold capital, the Swiss central bank on Thursday said UBS and Credit Suisse need to bolster their capital positions.

It was a blow to confidence in Credit Suisse, sending its stock plummeting over 9% in recent New York action to $18.04. That’s the lowest the ADRs have traded in over nine years, according to FactSet Research.

UBS, meanwhile, was down just 0.4% to $11.54.

From Dow Jones’ Neil MacLucas and John Revill:

The comments spooked investors and weighed on both banks’ shares. Credit Suisse stock was particularly hard hit on concerns that it could have to raise substantial amounts of dilutive common equity and possibly cut its dividend to meet the Swiss National Bank’s demands.

“Economic and financial conditions for the Swiss banking sector have deteriorated since June 2011, and the big banks’ loss-absorbing capital is still below the level needed to ensure sufficient resilience,” the Swiss National Bank said in its annual report on financial stability in Switzerland, released to coincide with the central bank’s monetary policy review.

While the two have made progress in building up their capital to meet tougher standards than international bank reforms called Basel III, and rank among the best capitalized in the world, Credit Suisse in particular needs to do more, the SNB said.

Switzerland was already imposing heavier standards on capital levels on their banks than other countries, but as Dimon pointed out to an inquisitive senator, Credit Suisse and UBS are significantly bigger than Switzerland’s GDP.

SNB said the move is driven by the renewed escalation of the euro-zone crisis. Though SNB believes the losses from exposure to the periphery countries would be “relatively small,” the “accompanying deterioration in economic conditions would bring substantial losses.”

Credit Suisse said it was one of the best funded and capitalized global banks.{/B]

My take:

SNB has a huge stake in protecting its most prized industry in the context of the unwinding European currency debacle. Having said that CS generates the bulk of its revenues from asset management which HAS BEEN GROWING at a steady clip and should accelerate after the smoke clears.

Take advantage of the upcoming discounts in the wake of unjustified fear.

 

Hope they go bankrupt

They only hire indians on H1B Visas for IT positions

 

Interesting. That I did not know. Your wish for BK has born true for many financial institutions perhaps they'll be next.

 

From Trading alpha today:

Credit Suisse Group (CS) is trading around 0.65 times tangible book value. The shares got hammered on Thursday, falling more than 9%, as the Swiss Central Bank told the bank to boost capital. New regulations under Basel III have placed heightened capital adequacy requirements on the banks in the region. Switzerland has self-imposed a higher standard of requirements on its banks even though losses due to the regional debt crisis are believed to be small. Revenue at Credit Suisse is globally diversified with only 23% coming from its Europe, Middle East, and Africa segment (EMEA), while the bank has larger stakes in the Switzerland (28%), Americas (38%), and Asia (10%). The shares pay a 4.0% dividend yield.

Bouncing higher. Expect volatility which of course means selling options premium is attractive.

 

Statement from CS CEO:

Credit Suisse Has No Plans to Sell Shares, CEO Dougan Says
By Matthias Wabl - Jun 17, 2012 3:08 AM PT



Credit Suisse Group AG (CSGN) has no plans to sell shares, Chief Executive Officer Brady Dougan said after a central bank report called for a “marked increase” in capital this year.

The bank may continue to offer owners stock rather than cash as dividends to boost equity, Dougan told SonntagsZeitung, saying he’s “disappointed” by the Swiss National Bank (SNBN) report as the capital calculation is incomplete. Marc Dosch, a spokesman for Credit Suisse in Zurich, confirmed the remarks.
Enlarge image Credit Suisse CEO Brady Dougan

Credit Suisse Group AG Chief Executive Officer Brady Dougan said he is confident the bank can achieve profit targets and will earn enough in coming quarters to boost capital. Photographer: Gianluca Colla/Bloomberg

The Swiss government, the SNB and the market regulator are stepping up efforts to make the country’s biggest banks prepared in the event that the European debt crisis worsens. The SNB on June 14 singled out Credit Suisse as needing a bigger capital boost than larger rival UBS AG (UBSN), and put a timeframe on its recommendation. Credit Suisse shares fell 11 percent that day.

When asked how long he plans to stay as CEO, Dougan said he’s committed to his responsibilities. While there’s “always pressure from the board,” cooperation is “very close and good, and we’re holding very intense discussions,” he said.

Credit Suisse is one of the “safest banks,” and the central bank didn’t take into account 6 billion Swiss francs ($6.3 billion) of convertible securities when calculating its capital ratios, Dougan said. That would have given a ratio of 7.9 percent rather than 5.9 percent, he said. “Technically,” the securities will be issued in 2013, according to the CEO.
Capital Boost

Dougan is confident the bank can achieve profit targets and will earn enough in coming quarters to boost capital, he said. His different assessment from the central bank may be partly explained by a “very pessimistic scenario about the debt crisis” in the SNB stability report, he said.

“The SNB report unsettled customers and market participants. That’s not only bad for us, but for the entire financial center,” according to Dougan. Credit Suisse has the highest capital ratio among its peers and its liquidity is “very good,” he said.

The government and the central bank had to prop up UBS in 2008 by letting it spin off risky assets into an SNB-sponsored fund. Credit Suisse didn’t need any support from the tax payer throughout the crisis.

UBS’s writedowns and losses from the crisis totaled more than $57 billion, according to data compiled by Bloomberg. Its losses amounted to more than 3 percent of the net balance-sheet total, the SNB said June 14, while loss-absorbing capital made up about 1.7 percent of total assets at Credit Suisse and 2.7 percent at UBS at the end of March.

 

Parsed

The bank may continue to offer owners stock rather than cash as dividends to boost equity
is confident the bank can achieve profit targets and will earn enough in coming quarters to boost capital.
Credit Suisse has the highest capital ratio among its peers and its liquidity is very good, he said.


How low can it go? Who knows? But it is unlikely to become insolvent and the Dividend is protected albeit a a dlluted basis. Divi's are mostly psychologic in any event and given CS is selling at a discount to book assets the risk profile at the coming levels is justified.

Famous last words---i.e. Lehman? or a worthy risk in the face of an imploding EU? You make the call.

 

That would explain all the Russians working there.