Moody's places Credit Suisse AG's Aa1 rating under review for possible downgrade
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Announcement:

Moody's places Credit Suisse AG's Aa1 rating under review for possible downgrade

Global Credit Research - 14 Nov 2011

New York, November 14, 2011 -- Moody's Investors Service has placed on review for downgrade the long-term ratings of Credit Suisse Group AG (senior at (P)Aa2) and subsidiaries, including subsidiaries Credit Suisse AG (deposits and senior debt at Aa1, bank financial strength rating at B) and Credit Suisse International (deposits and senior debt at Aa1). The short-term ratings of Credit Suisse AG (Prime-1), Credit Suisse Group AG ((P)Prime-1), Credit Suisse International (Prime-1), and affiliates were affirmed.

RATING RATIONALE

The rating action follows Credit Suisse's announcement that it had a pre-tax loss of CHF0.8 billion, excluding fair value gains on its own debt due to widening of credit spreads, for the third quarter of 2011. Credit Suisse also reported that its Investment Banking segment had a pre-tax loss of CHF681million (excluding fair value gains and losses on its own debt), and its Private Banking segment also suffered a sharp decline in pre-tax profits, down 14% from the second quarter and 21% from a year ago (excluding provisions for litigation charges in Wealth Management related to US and German tax matters).

Moody's stated that Credit Suisse's results were weaker than expectations, and highlighted the challenges that the bank faces in the current environment. Although the appreciation of the Swiss Franc against the US dollar has put some pressure on the bank's results, much of the decline was driven by the overhang of macroeconomic uncertainty and the adverse impact of illiquid markets during the quarter on fixed income sales and trading revenues. Moody's also noted that despite steps taken to strengthen its client-facing trading franchise over the past two and a half years, Credit Suisse's fixed income sales and trading revenues suffered a more significant year-over-year decline than many of its peers. The rating agency believes this reflects the bank's greater reliance on credit and mortgage trading, and its relatively weaker positioning vis a vis peers in foreign exchange and rates. The bank's quarterly results have been more volatile than similarly rated peers and its year-to-date returns relative to risk-weighted assets are weaker.

The rating agency noted that Credit Suisse has demonstrated consistent strength in risk management since the start of the financial crisis, has significantly lowered its risk appetite, and has maintained robust liquidity and strong regulatory capital ratios throughout. "Credit Suisse is among the highest rated banks in the world today. The bank's numerous strengths left it well positioned relative to peers during and in the immediate aftermath of the financial crisis," said David Fanger, Moody's Senior Vice President. "However, we believe that the challenges the bank now faces, and the re-engineering those challenges will require, increase the risks to bondholders relative to other similarly rated companies such that a lower rating may be more appropriate."

Credit Suisse has announced plans to refine its Investment Banking strategy and modestly re-position its Private Banking business. This is the second strategic realignment Credit Suisse has undertaken in its Investment Bank since 2008 and in Moody's view the need for a second initiative highlights the continuing challenges faced by Credit Suisse in its Investment Banking division. "We believe the need for further restructuring is driven by both the continuing macroeconomic uncertainty and the increased pressure on shareholder returns that is likely to result from higher regulatory capital requirements," said Mr. Fanger. "While this pressure also exists at many of Credit Suisse's peers, we believe Credit Suisse is more challenged due to its mix of business," he added. "As a result of the declining profitability of the bank's Wealth Management businesses, stemming from the strong Swiss Franc, low interest rate environment and cautious client behavior, Credit Suisse has become more reliant on its investment banking business, at a time when that business is also under significant pressure."

Moody's review will focus on the restructuring steps announced by Credit Suisse and its implementation, as well as on the underlying profitability trends, particularly in its Investment Banking and Wealth Management divisions, going forward.

The methodologies used in this rating were Bank Financial Strength Ratings: Global Methodology published in February 2007, and Incorporation of Joint-Default Analysis into Moody's Bank Ratings: A Refined Methodology published in March 2007. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

For a full list of Credit Suisse Group subsidiaries and the ratings affected by this action, please refer to www.moodys.com.

Credit Suisse Group AG is headquartered in Zurich, Switzerland. At 30 September 2011 it had total assets of CHF 1061 billion.

REGULATORY DISCLOSURES

The Global Scale Credit Ratings on this press release that are issued by one of Moody's affiliates outside the EU are considered EU Qualified by Extension and therefore available for regulatory use in the EU. Further information on the EU endorsement status and on the Moody's office that has issued a particular Credit Rating is available on www.moodys.com.

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

David Fanger
Senior Vice President
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Johannes Wassenberg
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's places Credit Suisse AG's Aa1 rating under review for possible downgrade
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