Credit Suisse Slips After Downgrade, Reversing Trend Since Plea

Credit Suisse Group AG fell after analysts at Bank of America Merrill Lynch downgraded the stock, erasing much of the gains since the bank resolved its long-running U.S. dispute over assistance to tax dodgers.

Shares in Switzerland’s second-biggest bank dropped as much as 2.3 percent after Bank of America Merrill Lynch analysts lowered their recommendation from buy to neutral yesterday, a bank holiday in Switzerland. This is the biggest decline since May 19, when the bank pleaded guilty after markets closed to helping Americans evade taxes and agreed to pay a fine of $2.6 billion.

Shares were down 1.6 percent at 26.60 Swiss francs at 11:44 a.m. in Zurich.

Credit Suisse surged after the settlement and was up 3.7 percent by the close of trading on May 28. Credit Suisse Chief Executive Officer Brady Dougan said the deal resolved the last major litigation issue for the bank.

The fine cut the bank’s common equity ratio to 9.3 percent from 10 percent at the end of March. That’s the lowest among 16 global investment banks tracked by Bloomberg Industries.

“Pressure is on CS to rebuild,” the analysts said about the capital ratio in yesterday’s note. “We think this can be done organically, but room for error is limited.”

The analysts’ estimated earnings per share for 2014 dropped by 57 percent because of the settlement, they said.

Before it's here, it's on the Bloomberg Terminal.