Fitch Ratings has placed Credit Suisse AG's (Credit Suisse) Long-term
Issuer Default Rating (IDR) of 'AA-' on Rating Watch Negative (RWN). The
bank's Viability Rating (VR) of 'aa-' and its Short-term IDR of 'F1+'
have also been placed on RWN. As a result, its subsidiaries' IDRs, the
holding company Credit Suisse Group AG's (CSG) IDRs and its debt ratings
have also been placed on RWN. A full list of rating actions is at the
end of this announcement.
The rating action is part of Fitch's broad review of the largest banking
institutions in the world announced in a separate comment 'Fitch
Reviewing Global Trading and Universal Banks; Places Seven on Rating
Watch Negative' published on 13 October available on www.fitchratings.com.
Fitch expects to resolve the RWN within a short time frame and that any
downgrade of Credit Suisse's VR and Long-term IDR would likely be one
notch and at maximum two notches. In resolving the RWN, Fitch will
concentrate on Credit Suisse's ability to generate adequate
profitability in a more difficult operating environment, on its internal
capital generation necessary to achieve the strong capitalisation
required under new Swiss regulations for the two big Swiss banks and on
the capacity of its global wealth management business to contribute more
stable earnings to compensate for the potentially higher volatility of
investment banking earnings.
The agency notes that as a Swiss bank, Credit Suisse is not directly
affected by the current euro zone crisis. Nevertheless, the group has
significant operations in the euro zone and conditions in global capital
markets have affected H211 earnings in its investment banking division.
Credit Suisse's investment banking operations concentrate on
client-driven flow business, where the bank benefits from strong
franchises in a number of key segments globally. However, reduced client
activity has resulted in lower earnings in Q211, and Fitch expects Q311
results to reflect the prolonged uncertainty in global capital markets.
As a Swiss-domiciled banking group, Credit Suisse is subject to Swiss
regulations, which will require the group to reach regulatory capital
ratios significantly above those for banks in other European countries.
Under these regulations, Credit Suisse will have to reach a minimum 10%
common equity Tier 1 ratio under Basel III. In addition, the bank will
have to hold a 9% capital buffer. The group's current regulatory capital
ratios are strong with a core Tier 1 ratio of 13.1% at end-June 2011.
However, the bank's Fitch core capital (FCC) ratio was at 9.1%,
significantly below the regulatory capital ratio, and Credit Suisse will
have to achieve a material reduction in risk-weighted assets and
increase capital through retained earnings to reach its target.
Fitch considers Credit Suisse's liquidity sound. The bank benefits from
a solid customer deposit base, and short-term liquidity is managed
conservatively. As of end-June 2011, Credit Suisse estimated a net
stable funding ratio under Basel III regulations of 95% and a liquidity
coverage ratio 'well in excess of requirements.'
The rating actions are as follows:
Credit Suisse:
Long-term IDR: 'AA-'; placed on RWN
Short-term IDR: 'F1+'; placed on RWN
Viability Rating: 'aa-'; placed on RWN
Individual Rating: affirmed at 'B'
Support Rating: affirmed at '1'
Support Rating Floor: affirmed at 'A'
Senior unsecured debt (including programme ratings): 'AA-'; placed on
RWN; 'F1+' placed on RWN
Senior market-linked notes: 'AA- emr'; placed on RWN
Subordinated lower Tier 2 notes: 'A+'; placed on RWN
Tier 1 notes and preferred securities: 'A'; placed on RWN
CSG
Long-term IDR: 'AA-' placed on RWN
Short-term IDR: 'F1+'; placed on RWN
Viability Rating: 'aa-'; placed on RWN
Individual Rating: 'B'; placed on RWN
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Senior unsecured debt (including programme ratings): 'AA-'; placed on
RWN; 'F1+' placed on RWN
Senior market-linked notes: 'AA- emr'; placed on RWN
Subordinated notes: 'A+'; placed on RWN
Preferred stock: 'A'; placed on RWN
Credit Suisse International:
Long-term IDR: 'AA-'; placed on RWN
Short-term IDR: 'F1+'; placed on RWN
Support Rating: affirmed at '1'
Senior unsecured debt (including programme ratings): 'AA-' placed on
RWN; 'F1+' placed on RWN
Dated subordinated notes: 'A+'; placed on RWN
Perpetual subordinated notes: 'A'; placed on RWN
Credit Suisse (USA) Inc.:
Long-term IDR: 'AA-'; placed on RWN
Short-term IDR: 'F1+'; placed on RWN
Support Rating: affirmed at '1'
Senior unsecured debt (including programme ratings): 'AA-' placed on RWN
Commercial paper programme: 'F1+'; placed on RWN
Subordinated notes: 'A+'; placed on RWN
Credit Suisse NY (branch):
Long-term IDR: 'AA-'; placed on RWN
Short-term IDR: 'F1+'; placed on RWN
Senior unsecured debt (including programme ratings): 'AA-'; placed on RWN
Commercial paper programme: 'F1+'; placed on RWN
Senior market-linked notes: 'AA- emr'; placed on RWN
Claudius Limited:
Preferred securities: 'A'; placed on RWN
Credit Suisse Group (Guernsey) I Limited
Tier 2 Contingent Notes: 'BBB+'; placed on RWN
This rating action has no impact on the 'AAA' rating of the outstanding
covered bonds issued by Credit Suisse.
Additional information is available at 'www.fitchratings.com'.
The ratings above were solicited by, or on behalf of, the issuer, and
therefore, Fitch has been compensated for the provision of the ratings.
Applicable criteria, 'Global Financial Institutions Ratings Criteria',
dated 16 August 2011, are available at www.fitchratings.com.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING
THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.
IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.
PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS
SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS
OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES
AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF
THIS SITE.
