| Credit Suisse AG | ||
| Rating Reaffirmed | ||
| Rating Action | ||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||
| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its 'CRISIL A1+' rating on the certificates of deposit programme of Credit Suisse AG, Mumbai Branch (Credit Suisse Bank).
The rating on the debt instruments of Credit Suisse Bank is based on S&P Global Ratings’ (S&P Global) counterparty ratings of ‘A+/Stable/A-1’ on its new parent, UBS AG.
CRISIL Ratings factors in the clarity received on the strategic importance of Credit Suisse India subsidiaries to UBS AG, its new parent and expectation of support from them. UBS’s core business model is wealth management, and India is viewed as an important hub in Asia for this business.
Credit Suisse Group AG announced on March 19, 2023, its merger agreement with UBS Group AG and that UBS will be the surviving entity upon closing of the merger transaction. On June 12, 2023, the acquisition was completed with all Credit Suisse's Group AG's assets, liabilities, and contracts merging into UBS Group AG. Credit Suisse AG is expected to conduct its business in the ordinary course and implement its restructuring measures in collaboration with UBS, till the acquisition is consummated.
On August 31, 2023, UBS Group AG announced its results for second-quarter 2023, including Credit Suisse's operations in the consolidated reporting for the first time, and disclosed details of the group's restructuring. Consequently, S&P Global revised its ratings on Credit Suisse AG and rated subsidiaries from ‘A/Watch Developing/A-1’ to A+/Stable/A-1’. Furthermore, S&P views the prospect of support to all Credit Suisse subsidiaries as higher and in line with that expected for UBS operating entities, even though there is no publicly committed timeline for the legal integration of smaller Credit Suisse entities into UBS entities.
Credit Suisse Bank commenced operations from February 15, 2011 with an initial capital infusion of Rs 1,135 crore from the head office. As on March 31, 2023, advances and deposits stood at Rs 657 crore and Rs 1,696 crore respectively. For fiscal 2023, Credit Suisse Bank reported PAT of 261 crore on a total income (net of interest expenses) of Rs 564 crore. It had excess-statutory liquidity ratio (SLR) investments of Rs 5,337 crore (147% of net demand and time liabilities) as on 8 September, 2023.
The ratings on the certificates of deposit programme of Credit Suisse Bank, the Indian operations arm of Credit Suisse AG, is centrally based on S&P Global’ counterparty ratings of ‘A+/Stable/A-1’ on, its new parent, UBS AG. |
Analytical Approach The rating on the certificate of deposit programme of Credit Suisse Bank is based on S&P Global’s counterparty ratings of ‘A+/Stable/A-1’ on UBS AG. Credit Suisse Bank is the Indian operations arm of Credit Suisse AG, ultimately held by UBS Group AG. |
Key Rating Drivers & Detailed Description Strengths: Strategic importance of Credit Suisse Bank to UBS group in line with expectation of support Amidst the reorganisation and restructuring by Credit Suisse AG in consultation with UBS Group AG, UBS has clearly articulated the strategic importance of the India operations to the global business of UBS. The company plans to leverage growth opportunities in the Indian market through Credit Suisse subsidiaries in India that are already well-established entities in this space.
S&P Global in its recent rationale has also indicated that it believes prospects of support to all Credit Suisse subsidiaries is higher now, and in line with UBS subsidiaries, even though there is no publicly committed timeline for the legal integration of smaller Credit Suisse entities into UBS entities.
The rating on Credit Suisse Bank to be based on the long-term issuer credit rating of 'A+/Stable/A-1' by S&P Global on UBS AG. Credit Suisse Bank is expected to be strategically important to, and envisaged to receive operational, financial, and managerial support from, UBS AG.
Comfortable capitalisation Credit Suisse Bank’s capitalisation is comfortable, with total reported networth of Rs 4,997 crore as on March 31, 2023 (Rs 4,737 crore as on March 31, 2022). Capital adequacy ratios are comfortable as well, with tier-I and overall capital adequacy ratio of 43.78% and 46.96%, respectively, as on March 31, 2023 (55.73% and 60.02%, respectively, as on March 31, 2022). Head office had infused USD 198.9 million in Indian branch in January 2021. Furthermore, the capital profile is expected to remain supported by the head office, Credit Suisse AG, ultimately held by UBS Group AG.
Weakness: Modest scale of lending operations, expected to scale up over medium term Advances and deposits were Rs 657 crore and Rs 1,696 crore respectively as on March 31, 2023 (Rs 947 crore and Rs 2,833 crore as on March 31, 2022). Credit Suisse Bank had a sizeable investment book of Rs 14,474 crore as on March 31, 2023 (Rs 16,056 crore as on March 31, 2022), more than 90% of which is invested in government securities. |
Liquidity: Superior Credit Suisse Bank had excess-statutory liquidity ratio (SLR) investments of Rs 5,337 crore (147% of net demand and time liabilities) as on 8 September, 2023. Additionally, the branch operations have support in the form of funding lines from the head office. |
Rating Sensitivity Factors Downward factors
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About the Bank Credit Suisse AG is part of the UBS group with an internationally active financial services franchise. The group had consolidated assets of 1,096,318 million USD June 31, 2023 (unaudited). Credit Suisse Bank commenced operations from February 15, 2011 with an initial capital infusion of Rs 1,135 crore from the head office followed by another Rs 640 crore in fiscal 2018 and Rs.1,450 crore in fiscal 2021.
As on March 31, 2023, total loan portfolio was Rs 657 crore (Rs 947 crore as on a year earlier). Bulk of the assets of the Indian operations are the investments in Government Securities. For the fiscal 2023, PAT was Rs. 261 crore on a total income (net of interest expenses) of Rs 564 crore, against Rs. 303 crore and Rs. 376 crore, respectively |
Key Financial Indicators
1As per CRISIL Ratings calculations |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Criteria Details
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