The Future of Credit Suisse is Doubtful: Harris Associates

  • Harris Associates divested its entire stake in the financial institution after observing continuous losses and clients’ departures.
  • David Herro pointed out that there have been large outflows from Credit Suisse’s wealth management.

Credit Suisse, one of the world’s biggest Swiss-based financial institutions, has been abandoned by one of its longest-standing shareholders, Harris Associates, due to its cryptic behavior. Harris Associates, a US investment manager, divested its entire stake in the financial institution due to its ineffective strategies after observing continuous losses and client departures.

As reported by Financial Times, Harris Associates disclosed it had 10% of Credit Suisse’s shares last year out of which half were sold in January. David Herro, the Chief Investment Officer (CIO) of Harris Associates, claimed that the US investment manager started to cut its exposure in October following Credit Suisse’s $4.3B fundraising when Saudi National Bank became the top investor.

Herro also pointed out that there have been large outflows from Credit Suisse’s wealth management, which created doubt about the financial institution’s future. It was revealed approximately SFr111 billion was withdrawn by Credit Suisse’s customers over the last three months of last year.

Elaborating on the liquidation of its stakes, the CIO of Harris Associates, Davide Herro, expressed:

We have lots of other options to invest. Rising interest rates mean lots of European financials are headed in the other direction. Why go for something that is burning capital when the rest of the sector is now generating it?

Moreover, Herro mentioned that he does not believe in Credit Suisse’s latest radical restructuring. He also expressed his frustration regarding the costs, along with the lack of transparency, revolving around a banking deal.

Credit Suisse is one of the financial institutions that have shown interest in the crypto industry. Last month, Taurus SA, a Swiss-based digital asset platform, raised $65 million in an equity round which was led by Credit Suisse.

However, last year, Credit Suisse faced scrutiny from media houses such as The Guardian, after a whistleblower revealed the financial institution’s hidden dark world. The leaked data highlighted that the financial institution was an in-house bank for clients involved with criminal activities like torture, drug trafficking, money laundering, corruption, and other serious crimes. There is still no indication if this was the reason behind Harris Associates’ liquidation.

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