untenable. New Chair Axel Lehmann wants Koerner to speed things up and cut costs to below $16.1 billion compared with an annualised rate of $17.5 billion this year. He’ll focus the investment bank on advisory services like M&A rather than capital-intensive businesses like credit trading, which have little relevance to wealth clients.
Meanwhile the bank’s continued red ink is depleting its common equity Tier 1 capital, which Koerner needs to fund his restructuring. Credit Suisse’s CET1 ratio dipped to 13.5% in June compared with 13.8% in March. Assuming Koerner wants to stay above 13%, he only has a $1.4 billion buffer to absorb any future losses from winding down trading businesses. It might be safer to pad that out with a capital hike.
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