Credit Suisse Losses and RBS Shares
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Credit Suisse Losses and RBS Shares

Credit Suisse Losses and RBS Shares


Trading Features / Strategies from Simon Denham of Capital Spreads.

Credit Suisse has managed to hammer the market down this morning after coming with a loss of $2.1bn against estimates of around $600m. Analysts will be sharpening their knives as there is nothing they hate more than being made to look fools over forecasts.

Normally there is a sort of parasitic dance as corporates try to indicate P/L ranges without actually stating the numbers (which would be illegal) whilst at the same time the analysts try to ask questions that give them a more accurate figure.

Whilst many will shriek at the fact that there is any leakage at all in the run up to a company statement, in fact a general flow of information throughout the year keeps the markets reasonably in order and avoids huge sudden dislocations in share prices. It also helps to cut back on insider dealing as there is normally no shock revelation of either exceptionally good or bad figures which would give an insider a massive edge.

This is where this announcement from Credit Suisse will be angering share holders. The shares are likely to take an almighty knock on the open this morning, bad enough for those holding the equity but doubly annoying when there will be justifiable anger that there had been no prior warning as to the size of the deficit. This is likely to increase the chances of a significant rights issue. It may also hurry on the plans of others, who might also be looking to pick their investors’ pockets, encouraging a quicker move to get in before what might be a pretty hefty Credit Suisse cash call.


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Also worrying is the fact that in the Wealth Management Division, which as with Suisse’s competitors it has been doing well in, revenue actually fell by 14%.

The RBS AGM went with a bit of damp fizzle as the board held its course (and its jobs) in the face of some seriously annoyed investors. There cannot be many companies in the FTSE 350 which have shown virtually zilch value appreciation for over ten years and where the main players remain firmly in place. The current situation seems to fly in the face of normal expectations over corporate responsibility. Comments about ‘stability’ being required in the short term would be more acceptable if, as some major investors commented, a more accurate picture of the bank’s situation had been painted by Sir Tom in his recent shareholder road show. Only a couple of months ago an increase in the dividend was been mooted at the 2007 full-year numbers shindig. A possibility that they must have realised at that time was just not probable.

The subsequent events will have not pleased either the regulators or the City. The stock is now just 35p away from the infamous ‘HBOS’ rumour low.



The above comments do not constitute investment advice and neither Capital Spreads nor Clean Financial accept any responsibility for any use that may be made of them.


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Risk Warning: Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.

Article provided / approved by Capital Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110.

'Credit Suisse Losses and RBS Shares' edited by SD, updated 24-Apr-08



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