S&P Downgrades Credit Suisse Credit Rating Outlook Following Large Losses from Archegos

[Image source= Reuters Yonhap News]

[Asia Economy Reporter Byunghee Park] Credit rating agency Standard & Poor's (S&P) has downgraded the credit outlook of Swiss investment bank Credit Suisse from stable to negative, signaling a potential future credit rating downgrade.

S&P lowered the credit outlook, citing significant loss risks related to the U.S. hedge fund Archegos Capital Management incident. S&P currently rates Credit Suisse's holding company's long-term bond credit rating at BBB+.

Credit Suisse stated that it may reflect substantial losses related to the Archegos incident in its first-quarter earnings this year but did not disclose the exact loss amount.

The market estimates that Credit Suisse could incur losses up to $4 billion due to the Archegos incident. Credit Suisse also suffered losses related to its investment in the UK financial firm Greensill Capital.

S&P noted, "Thanks to solid capital and profitability, Credit Suisse is expected to manage potential financial losses well," but also pointed out, "However, due to the sudden Archegos incident, doubts have increased regarding Credit Suisse's risk management capabilities, risk appetite, and the adequacy of risk-reward balance."

This content was produced with the assistance of AI translation services.