Bank of America is now recommending the sale of Swiss bank shares and has lowered their target price from $ 12.19 to $ 10.69, the second change in its recommendation on Credit Suisse shares in the past 14 days. JPMorgan Chase analysts no longer recommend buying Swiss bank shares, but their rating is now neutral.
Billionaire Bill Archgang’s fund collapsed last month. According to Reuters, the fall was due to bets on shares of some media companies financed by borrowed money.
Credit Suisse was not the only large investment bank to support Hwang’s business. But rival Deutsche Bank or Goldman Sachs were able to reduce their exposure in time and suffered only minimal losses, the agency writes Bloomberg.
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Credit rating agencies responded to the collapse of the Archegos fund last week by lowering Credit Suisse’s outlook from neutral to negative, which means that the bank’s credit rating could be lowered in the future. Fitch recalls other recent bankruptcies, which together can damage Credit Suisse not only financially but also reputably. For example, in March, the bank had to liquidate its investment fund, which held assets related to the financial company Greensill Capital. She recently declared insolvency.
The Swiss bank expects a pre-tax loss of 900 million francs in the first quarter of this year due to the fall of Archegos and Greensill. At the same time, the financial institution has suspended a program to buy back its shares worth billions of francs until the situation improves.
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