Printer Friendly

CREDIT SUISSE'S 'AAA' STRUCTURED TRANSACTION RATING AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, June 3 /PRNewswire/ -- Credit Suisse's long-term 'AAA' structured transaction rating is affirmed by Fitch and removed from FitchAlert with evolving implications. The action reflects the strategic and financial benefits expected from Credit Suisse's merger with Swiss Volksbank (SVB), Switzerland's fourth largest bank. Important to the affirmation is confidence in management's ability to effectively restructure the two banks and maintain a leading competitive position. The merger also strengthens the Swiss banking sector, which is undergoing difficulties from a prolonged domestic recession.
 The merger will boost Credit Suisse's market share in the domestic sector in line with its major competitors. The enlarged company is expected to hold 20 percent of the retail market, 17 percent of the domestic lending market, and 14 percent of the mortgage market. The resulting economies of scale should lower operating costs. A stronger domestic base should also minimize future earnings variability from equity and derivatives trading. In 1990, profits dipped 20 percent as a result of weak equity trading profits.
 Credit Suisse Holding has financed the acquisition of 98.5 percent of SVB by issuing common shares of Swiss franc (Sfr) 1.6 billion, equivalent to 69 percent of SVB's year-end 1992 book value. After reviewing the loss content of SVB's domestic portfolio, Fitch has concluded that the Sfr 500 million discount should appropriately cover necessary restructuring costs and higher provisioning risks. Although SVB's current loan problems are more than twice loan loss reserves, additional coverage is provided by hidden reserves in the form of conservatively valued real estate holdings. While loan loss provisions in 1993 could be as high as 1992 charges, net profits of the combined companies should improve this year.
 Credit Suisse management plans to implement a stringent cost reduction and consolidation program to produce a 10 percent return on the investment. Annual savings of Sfr 200-500 million are planned through the elimination of 150 of the 400 domestic branches and natural staff attrition. Reaching these goals by 1995 will depend on an early recovery of the Swiss economy.
 Over the past two years, Credit Suisse has enhanced its capital market activities with an indirect link to CS First Boston and the formation of a derivatives subsidiary, Credit Suisse Financial Products. Falling interest rates and buoyant commission income helped boost Credit Suisse's pre-provision operating profits by 12 percent in 1992. Pro forma financial statements for the combined companies will be available for the full calendar year 1993.
 -0- 6/3/93
 /CONTACT: Ricardo Kleinbaum of Fitch, 212-908-0525/


CO: Credit Suisse ST: IN: FIN SU: RTG

PS -- NY029 -- 4882 06/03/93 10:25 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jun 3, 1993
Words:432
Previous Article:SEARS MAY REVENUES RISE 6.9 PERCENT
Next Article:THE DRESS BARN, INC. REPORTS MAY SALES RESULTS
Topics:


Related Articles
HEMET HOUSING AUTHORITY CALIFORNIA HOUSING 'AAA/F-1+' BONDS AFFIRMED BY FITCH -- FITCH FINANCIAL WIRE --
PMI-INSURED "SUPER-SENIOR" MORTGAGE DEBT AFFIRMED, OFF FITCHALERT -- FITCH FINANCIAL WIRE --
FITCH AFFIRMS 'AAA' ON CREDIT SUISSE SUPPORTED CFC-8 TRANSACTION -- FITCH FINANCIAL WIRE --
CREDIT SUISSE'S STRUCTURED RATING ON FITCH ALERT NEGATIVE -- FITCH FINANCIAL WIRE--
TRANSACTIONS BACKED BY CREDIT SUISSE PLACED ON FITCH ALERT -- FITCH FINANCIAL WIRE --
Access Financial $331 Million Manufactured Housing Certificates Affirmed By Fitch IBCA
ACA Closes Initial ABS CDO Transaction with Credit Suisse First Boston.
Fitch Upgrades 1 & Affirms 10 Classes from 6 Capital One Auto Loan-Backed Transactions.
Fitch Affs 27, Upgrs 4 & Places 1 Class on Watch Negative in 5 KeyCorp Student Loan Trans.
Fitch Affs Sierra Timeshare 2004-1 & Capital One Auto Finance 2004-B at 'AAA'; Off Watch Negative.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters