Credit Suisse’s surprise loss on illiquid trading positions, announced last month, may force the company to sell a larger stake in a unit than previously planned, according to Morgan Stanley.
Bloomberg News reports that the bank earmarked its Swiss universal bank for a partial initial public offering by the end of 2017. The trading debacle, which prompted the bank to say it may post a first-quarter loss, and other challenges could force the bank to put up more of the unit for sale, hurting future earnings, Morgan Stanley analysts led by Huw Van Steenis said in a note to clients on Thursday.
The loss is compounding pressure on the company as it carries out a difficult overhaul, seeking to bolster capital while bearing costs from honing its investment bank and leaning more on wealth management, he wrote. The pressures “suggest to us that CS could need to sell more” of the subsidiary, he wrote.
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