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April 15, 2014

Credit Suisse Value Lags UBS as Dougan Keeps Debt Trading

“Credit Suisse Group AG Chief Executive Officer Brady Dougan could take a lesson from Zurich neighbor UBS AG as he seeks to boost his company’s stock: scale down the investment bank.

“Shares of Credit Suisse, Switzerland’s second-largest bank, are valued lower than UBS’s, and the gap has widened since UBS decided in 2012 to exit most debt trading, according to data compiled by Bloomberg. UBS, the biggest Swiss lender, has a market value 52 percent higher than Credit Suisse, even as analysts estimate it will earn only 7.6 percent more next year.

“Dougan needs to cut Credit Suisse’s dependence on the investment bank’s fixed-income business, which is volatile and lacks scale, said Kian Abouhossein, a London-based analyst at JPMorgan Chase & Co. He also said the securities unit, which had 19,700 employees at the end of last year, or 100 more than at the end of 2008, should cut its workforce by about 15 percent.

“All market participants, analysts and investors, would welcome an investment-bank restructuring beyond what has been announced so far,” Abouhossein said in a telephone interview last week after cutting his recommendation on Credit Suisse shares to underweight from neutral.”

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Read full Bloomberg article here.

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