Staff of Reuters 3 minutes Read this article (Adds further detail, background) (Reuters) – ZURICH, July 13 (Reuters) – Credit Suisse’s senior unsecured debt and deposit ratings were cut by Moody’s on Tuesday, citing concerns relating to the Archegos and Greensill matters as requiring considerable bank resources to settle. “As in previous situations, the examination and remediation of these concerns will likely demand a large amount of bank resources and managerial concentration, take time to resolve, and leave CS vulnerable to the aforementioned risk factors,” the rating agency wrote in a note. The aftermath from two scandals that shook Switzerland’s second-largest lender in March has left the bank reeling. It was obliged to wind down $10 billion in funds tied to the failed supply chain finance firm Greensill, and later it faced billions of dollars in losses when family office Archegos disintegrated. Credit Suisse’s long-term senior unsecured debt and deposit ratings were reduced by one notch to A1 from Aa3 on Tuesday, citing risk management flaws. The agency also expressed concern about the possibility of increased financial difficulties as a result of the Archegos and Greensill cases, as well as the possibility of client defections and franchise impairment. “While Moody’s expects CS to improve its governance and risk management systems, including adopting the recommendations emanating from internal and external investigations,” Moody’s stated, “the scope and effectiveness of these actions will remain undetermined for some time.” “Moreover, the financial and reputational consequences of the aforementioned incidents for CS remain unknown.” Credit Suisse’s ability to withstand unexpected losses has also been diminished as a result of a framework adjustment, it said. It affirmed Credit Suisse’s Baa1 ratings on long-term senior unsecured debt and stated that the outlook for the company’s ratings had stabilized. Moody’s said it believed Credit Suisse would be able to manage any further potential reputational consequences and that strategy changes would not have a significant impact on the bank’s ability to meet its mid-term profitability targets. (Brenna Hughes Neghaiwi contributed reporting.) Riham Alkousaa and John Revill edited the piece.)/n
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