Credit Suisse facing $8bn capital shortfall, Goldman says

Credit Suisse Group faces a capital shortfall of as much as CHF8bn ($8bn) in 2024, according to Goldman Sachs Group, a further illustration of the troubles facing the Swiss lender.

Analysts led by Chris Hallam estimate a hole of at least CHF4bn and say an equity raise would be “prudent,” given the need to restructure the investment banking operations at a time of “minimal” capital generation.

“Credit Suisse continues to face cyclical and structural challenges,” the analysts wrote in a note, maintaining a sell recommendation on the stock.

Speculation about the Swiss lender’s health – capital levels and liquidity – has rocked its shares this year, leading to calls from some analysts for an equity raise. Chief executive officer Ulrich Koerner is due to detail the bank’s second strategy overhaul in a year on October 27, widely seen as a critical opportunity to restore faith in the lender after more than a year of losses and management missteps.

Goldman’s comments were echoed by Jefferies analyst Flora Bocahut, who said in a note on Tuesday that Credit Suisse needs to build about CHF9bn of capital in the next two-to-three years. Given the dilutive nature of a capital increase, Bocahut expects Credit Suisse to prioritise asset disposals, she wrote in a note.

Bloomberg News reported Friday that bidders are lining up for the bank’s securitized products unit, a key pillar in the downsizing of its investment banking operations.