Credit Suisse Faces Tough Choices on Investment Bank

By Margot Patrickabout 1 month ago

When Credit Suisse Group AG announced a $4.7 billion hit from the Archegos Capital Management meltdown, there was a silver lining: The rest of its investment bank did so well in the quarter, the overall pretax loss would only be $1 billion.

The situation exposes the banks dilemma. Its investment bank, which takes on more risk, has been its profit engine, making up for its larger, slower-growing wealth-management business. But now it is expected to be scaled back for safety, with Chief Executive Thomas Gottstein saying its structure and strategic relevance would be evaluated.


The prospect of more restructuring costs and lost revenue in the unit has pushed some analysts to downgrade the stock, which is already down 25% since late February from the one-two blow of the collapse of another client, Greensill Capital, and then Archegos.

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