Remember Credit Suisse Collapse Rumors? Swiss Bank Could Be Short $8B, Goldman Sachs Says

Analysts from Goldman Sachs Group GS predict that Credit Suisse Group AG CS will experience a capital shortfall of up to 8 billion Swiss francs ($8 billion) in 2024 and maintain a Sell rating on the investment bank.

This follows a spike in Swiss banks' credit default swaps — the cost of insuring the company’s bonds against defaults — in early October, reminding investors of the Lehman Brothers collapse in 2008.

Analysts Chris Hallam and others estimate the shortfall will come as the bank is making critical structural changes and is at risk of continued litigation and restructuring costs.
Also Read: Here's The Latest On The Potential Credit Suisse Collapse

“In our base case (no restructuring), 2024 Common Tier Equity1 excess falls to CHF3bn ($3 billion). Given our view that the IB requires restructuring while capital generation is minimal, we now view an equity raise as prudent to preserve a buffer,” the analysts wrote.

Credit Suisse is considering bringing in an outside investor to buy a partial stake in the business and pump capital into a spinoff of its investment bank operations.

It is also attempting to raise capital by selling its securitized products arm.

Along with its earnings report on Oct. 27, it also stated that it is preparing for potential asset and company sales.

Credit Suisse, embattled by scandals, has seen its share prices drop from a pandemic-era high of $12.30 to $4.56 in intraday trading on Thursday. This has resulted in its market capitalization dropping by more than 50%.

See Also: Credit Suisse Lost $4.8B Due To Archegos Capital Ties - What Happened?