resigned after an inquiry into whether he had broken quarantine rules during the pandemic. But he made swift changes in his short tenure. To reduce risk taking, Mr. Horta-Osório said, the bank would close most of its prime brokerage businesses, which involve lending to big trading firms like Archegos. Credit Suisse also lost a big source of revenue as the market for special purpose acquisition companies, or SPACs, cooled.

By July, Credit Suisse had announced its third consecutive quarterly loss. Mr. Gottstein was replaced by Mr. Körner, a veteran of the rival Swiss bank UBS.

Mr. Körner and the chairman, Axel Lehmann, who replaced Mr. Horta-Osório, are expected to unveil a new restructuring plan on Oct. 27 in an effort to convince investors of the bank’s long-term viability and profitability. The stock of Credit Suisse has dipped so much in the past year that its market value — which stood around $12 billion — is comparable to that of a regional U.S. bank, smaller than Fifth Third or Citizens Financial Group.

appeared on Reddit.

Mr. Macleod said he had decided that Credit Suisse was in bad shape after looking at what he deemed the best measure of a bank’s value — the price of its stock relative to its “book value,” or assets minus liabilities. Most Wall Street analysts factor in a broader set of measures.

But “bearing in mind that most followers on Twitter and Reddit are not financial professionals,” he said, “it would have been a wake-up call for them.”

The timing puzzled the bank’s analysts, major investors and risk managers. Credit Suisse had longstanding problems, but no sudden crisis or looming bankruptcy.

Some investors said the Sept. 30 memo sent by Mr. Körner, the bank’s chief executive, reassuring staff that Credit Suisse stood on a “strong capital base and liquidity position” despite recent market gyrations had the opposite effect on stock watchers.

Credit Suisse took the matter seriously. Over the weekend of Oct. 1, bank executives called clients to reassure them that the bank had more than the amount of capital required by regulators. The bigger worry was that talk of a liquidity crisis would become a self-fulfilling prophecy, prompting lenders to pull credit lines and depositors to pull cash, which could drain money from the bank quickly — an extreme and even unlikely scenario given the bank’s strong financial position.

“Banks rely on sentiment,” Mr. Scholtz, the Morningstar analyst, said. “If all depositors want their money back tomorrow, the money isn’t there. It’s the reality of banking. These things can snowball.”

What had snowballed was the volume of trading in Credit Suisse’s stock by small investors, which had roughly doubled from Friday to Monday, according to a gauge of retail activity from Nasdaq Data Link.

Amateur traders who gather on social media can’t trade sophisticated products like credit-default swaps — products that protect against companies’ reneging on their debts. But their speculation drove the price of these swaps past levels reached during the 2008 financial crisis.

Some asset managers said they had discussed the fate of the bank at internal meetings after the meme stock mania that was unleashed in early October. While they saw no immediate risk to Credit Suisse’s solvency, some decided to cut trading with the bank anyway until risks subsided.

In another private message on Twitter, Mr. Lewis declined to speak further about why he had predicted that Credit Suisse would collapse.

“The math and evidence is fairly obvious at this point,” he wrote. “If you disagree, the burden is really on you to support that position.”

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Swiss National Bank monitoring Credit Suisse situation – Maechler

ZURICH, Oct 5 (Reuters) – The Swiss National Bank (SNB) is following the situation at Credit Suisse (CSGN.S) closely, SNB Governing Board member Andrea Maechler told Reuters on Wednesday.

Switzerland’s second-biggest bank saw its shares slide by as much as 11.5% and its bonds hit record lows on Monday, before clawing back some of the losses, amid concerns about its ability to restructure its business without asking investors for more money. read more

“We are monitoring the situation,” Maechler said on the sidelines of an event in Zurich. “They are working on a strategy due to come out at the end of October.”

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The SNB has declined to comment in the past about Credit Suisse, which has said it has a strong capital base and liquidity. It is due to announce details of a restructuring plan along with third-quarter results on Oct. 27.

In July, Credit Suisse announced its second strategy review in a year and replaced its chief executive, bringing in restructuring expert Ulrich Koerner to prune its investment banking arm and cut more than $1 billion in costs. read more

The bank is considering measures to scale back its investment bank into a “capital-light, advisory-led” business, and is evaluating strategic options for the securitised products business, Credit Suisse has said.

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Reporting by John Revill
Editing by Michael Shields and Mark Potter

Our Standards: The Thomson Reuters Trust Principles.

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Bank Of England Raises Rates But Avoids Bolder Hike Like Fed

By Associated Press
September 22, 2022

Surging inflation is a worry for central banks because it saps economic growth by eroding people’s purchasing power.

The Bank of England raised its key interest rate Thursday by another half-percentage point to the highest level in 14 years, but despite facing inflation that outpaces other major economies, it avoided more aggressive hikes made by the U.S. Federal Reserve and other central banks.

It is the Bank of England’s seventh straight move to increase borrowing costs as rising food and energy prices fuel a cost-of-living crisis that is considered the worst in a generation. Despite facing a slumping currency, tight labor market and inflation near its highest level in four decades, officials held off on acting more boldly as they predicted a second consecutive drop in economic output this quarter, an informal definition of recession.

The bank matched its half-point increase last month — the biggest in 27 years — to bring its benchmark rate to 2.25%. The decision was delayed for a week as the United Kingdom mourned Queen Elizabeth II and comes after new Prime Minister Liz Truss’ government unveiled a massive relief package aimed at helping consumers and businesses cope with skyrocketing energy bills.

The new measures have eased uncertainty over energy costs and are “likely to limit significantly further increases” in consumer prices, the bank’s policymakers said. They expected inflation — now at 9.9% — to peak at 11% in October, lower than previously forecast.

“Nevertheless, energy bills will still go up and, combined with the indirect effects of higher energy costs, inflation is expected to remain above 10% over the following few months, before starting to fall back,” the monetary policy committee said.

The bank signaled it is prepared to respond more forcefully at its November meeting if needed. Its decision comes during a busy week for central bank action marked by much more aggressive moves to bring down soaring consumer prices.

The U.S. Federal Reserve hiked rates Wednesday by three-quarters of a point for the third consecutive time and forecast that more large increases were ahead. Also Thursday, the Swiss central bank enacted its biggest-ever hike to its key interest rate.

Three of the British bank’s nine committee members wanted a similar three-quarter-point raise but were outvoted by five who preferred a half-point and one who voted for a quarter-point.

The decision “suggests the Bank of England is concerned about the U.K.’s economic deteriorating outlook amid the looming threat of recession,” said Victoria Scholar, head of investment at interactive investor. “The timid increase will do little to stem the slide in sterling but may avoid inadvertently inducing unnecessary pain for the economy which is already grappling with slowing demand and deteriorating confidence.”

Surging inflation is a worry for central banks because it saps economic growth by eroding people’s purchasing power. Raising interest rates — the traditional tool to combat inflation — reduces demand and therefore prices by making it more expensive to borrow money for big purchases like cars and homes.

Inflation in the United Kingdom hit 9.9% in August, close to its highest level since 1982 and five times higher than the Bank of England’s 2% target. The British pound is at its weakest against the dollar in 37 years, contributing to imported inflation.

To ease the crunch, Truss’ government announced it would cap energy bills for households and businesses that have soared as Russia’s war in Ukraine drives up the price of natural gas needed for heating.

The Treasury is expected to publish a “mini-budget” Friday with more economic stimulus measures, and the bank said it won’t be able to assess how they will affect inflation until its November meeting..

The Bank of England expects gross domestic product to fall by 0.1% in the third quarter, below its August projection of 0.4% growth. That would be a second quarterly decline after official estimates showed output fell by 0.1% in the previous three-month period.

The weakness partly reflects a smaller-than-expected rebound after an extra June holiday to celebrate the queen’s 70 years on the throne and the impact of another public holiday Monday for her funeral, officials said.

The bank avoided pressure to go bigger even as other banks around the world take aggressive action against inflation fueled by the global economy’s recovery from the COVID-19 pandemic and then the war in Ukraine.

This month, Sweden’s central bank raised its key interest rate by a full percentage point, while the European Central Bank delivered its largest-ever rate increase with a three-quarter point hike for the 19 countries that use the euro currency.

But British policymakers signaled they will “respond forcefully, as necessary” if there are signs that inflationary pressure is more persistent than expected, “including from stronger demand.”

The bank said it’s also moving ahead with plans to trim its bond holdings built up under a stimulus program, selling off 80 billion pounds ($90 billion) worth of assets over the next year to bring its portfolio down to 758 billion pounds.

Additional reporting by The Associated Press.

Source: newsy.com

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Roger Federer Announces Retirement From Professional Tennis

By Associated Press

and Newsy Staff
September 15, 2022

Federer, 41, made the announcement on Twitter, signaling the end to a career in which he won 20 Grand Slam titles.

Roger Federer announced Thursday that he is retiring from professional tennis at age 41 after winning 20 Grand Slam titles.

This decision comes just days after the end of the U.S. Open, which is expected to be the last tournament of 23-time major champion Serena Williams’ career, and signals the real end of an era in tennis.

Federer has not competed since Wimbledon in July 2021 — he has had a series of knee operations — and so in that sense, the news is not surprising.

But he had appeared at an event marking the 100-year anniversary of Centre Court at the All England Club this July and said he hoped to come back to play there “one more time.”

He also had said he would return to tournament action at the Swiss Indoors in October.

Federer’s last match anywhere came on July 7, 2021, when he lost at Centre Court in the Wimbledon quarterfinals to Hubert Hurkacz 6-3, 7-6 (4), 6-0.

Soon after, Federer had surgery to repair damage to his meniscus and cartilage in his right knee — his third operation on that knee in a span of 1 1/2 years.

Additional reporting by The Associated Press.

Source: newsy.com

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Stocks subdued by outsized rate risks, yen fragile

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  • Fed looms over broader markets, dollar rises
  • Oil tumbles on demand concerns, U.S. rail strike averted
  • Treasury yields climb while oil gold tumbles

NEW YORK, Sept 15 (Reuters) – Wall Street indexes were firmly in the red after a choppy start to Thursday’s session while bond yields rose as investors digested economic data that provided the Federal Reserve little reason to ease its aggressive interest rate hiking cycle.

Oil futures tumbled more than 3% on demand concerns and after a tentative agreement that would avert a U.S. rail strike, as well as continued U.S. dollar strength with expectations for a large U.S. rate increase. read more

Economic data showed U.S. retail sales unexpectedly rebounded in August as Americans ramped up purchases of motor vehicles and dined out more while taking advantage of lower gasoline prices. But data for July was revised downward to show retail sales declining instead of flat as previously reported.

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Separately the Labor Department said initial claims for state unemployment benefits fell for the week ended Sept. 10 to the lowest level since the end of May. read more

Investors are widely expecting an aggressive rate hike after the Federal Open Market Committee (FOMC) meeting next week, but nervously awaiting hints from Fed Chair Jerome Powell about future policy moves, said Quincy Krosby, chief global strategist at LPL Financial.

“The market remains choppy knowing that there’s a Fed meeting next week. Even though participants agree that it’ll be a 75 basis points rate hike, it’s what the statement adds to previous commentary and what Chairman Powell says in his press conference” that have them worried, Krosby said.

The Dow Jones Industrial Average (.DJI) fell 173.07 points, or 0.56%, to 30,962.02; the S&P 500 (.SPX) lost 44.69 points, or 1.13%, to 3,901.32 and the Nasdaq Composite (.IXIC) dropped 167.32 points, or 1.43%, to 11,552.36.

MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 0.96% while emerging market stocks (.MSCIEF) lost 0.57%.

Stocks, bonds and currencies on Thursday were showing a market “increasingly understanding the Fed is going to hike more aggressively next week,” said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina.

Referring particularly to the still strong labor market, Ladner said “economic numbers released today are tying a bow on the situation.”

Treasury yields rose with the two-year hitting fresh 15-year highs, after data on retail sales and jobless claims showed a resilient economy that gives the Fed ample room to aggressively hike interest rates.

Also already signaling a recession warning the inverted yield curve – the gap between 2-year and 10-year treasury yields – widened further to -41.4 basis points, compared with -13.0 bps a week ago.

Benchmark 10-year notes were up 4.5 basis points to 3.457%, from 3.412% late on Wednesday. The 30-year bond last fell 5/32 in price to yield 3.4779%, from 3.469%. The 2-year note last fell 5/32 in price to yield 3.8646%, from 3.782%.

“In this vicious cycle where the data continues to remain resilient, that would imply a Fed that would likely stay the course and continue to tighten policy,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.

Also clouding investors’ moods on Thursday was the World Bank’s assessment that the world may be edging toward a global recession as central banks across the world simultaneously hike interest rates to combat persistent inflation. read more

In currencies the dollar was slightly higher against the yen while the Swiss franc hit its strongest level against the euro since 2015. read more

The dollar index , which measures the greenback against a basket of major currencies, rose 0.091%, with the euro up 0.18% to $0.9995.

The Japanese yen weakened 0.19% versus the greenback at 143.44 per dollar, while Sterling was last trading at $1.1469, down 0.57% on the day.

Before the tentative labor agreement, fears of a U.S. railroad worker strike had supported oil prices due to supply concerns on Wednesday. In addition, the International Energy Agency (IEA) said this week that oil demand growth would grind to a halt in the fourth quarter.

U.S. crude settled down 3.82% at $85.10 per barrel while Brent finished at $90.84, down 3.46% on the day.

Gold dropped to its lowest level since April 2021, hurt by elevated U.S. Treasury yields and a firm dollar, as bets of another hefty Fed rate hike eroded bullion’s appeal.

Spot gold dropped 1.9% to $1,664.46 an ounce. U.S. gold futures fell 2.02% to $1,662.30 an ounce.

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Additional reporting by Herbert Lash in New York, Marc Jones in London, Stefano Rebaudo in Milan, Tom Westbrook in Singapore and Wayne Cole in Sydney; Editing by Kirsten Donovan and Jonathan Oatis

Our Standards: The Thomson Reuters Trust Principles.

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Store Shelves Are No Longer Bare, but Baby Formula Remains in Short Supply

More than six months after one of the largest infant formula manufacturing plants in the United States issued a recall and was then shut down because of contamination concerns, a newborn staple remains in short supply.

In parts of the country, parents and their families are scrambling to locate precious containers of formula for their babies and many large retailers remain out of stock of popular brands. Some companies like Walmart and Target are limiting the number of containers that can be purchased at one time.

While the situation has improved since mid-July, the out-of-stock figures for powder formula on store shelves in late August remained at 23 percent, still above the 10 percent it was before the recall and shutdown, according to the Chicago-based market research firm IRI.

infections in four babies — two of them fatal — who had consumed formula manufactured at the plant. On Feb. 17, two days after the shutdown, Abbott recalled batches of three powdered formulas over complaints of serious bacterial contamination. (Abbott has said that there is no “conclusive evidence” to link the company’s formulas to the illnesses.) That disruption made it clear just how dependent Americans were on a few formula manufacturers, and the Biden administration found itself scrambling to figure out how to make more product available.

ending around Nov. 14, the F.D.A. said it would release guidance this month on how the new companies can continue to sell in the United States past this fall.

“Parents in the U.S. have been looking for a better product than what they were being offered,” said Will McMahon, one of the members of the family who owns the British baby formula Kendamil. The company has spent the last three years working through the formal process, including clinical trials, necessary to get its organic infant formula approved by the F.D.A.

Kendamil was one of the earliest formulas to get its application approved by the F.D.A. in the wake of the Sturgis plant shutdown, and the company has begun sending two million cans of formula to the United States.

dropped in early August after it said the F.D.A. had notified it that it was “deferring further consideration” of its application to import formula into the United States.

resume manufacturing of Similac formulas at its plant in Sturgis.

The company also said that it increased production at other U.S.-based manufacturing plants and one in Ireland, and that it would supply the United States with more than eight million pounds of formula in August, an increase from the year before. But it noted it would take six weeks for the Similac product from the Sturgis plant to start to hit store shelves.

But some industry experts say it will take time for Abbott to gain back the market share it once had. “To be frank, there is a lot of consumer mistrust around Similac right now,” said Mr. Dittmeier of the W.I.C. program.

That could be a boon for Reckitt Benckiser, which has been running its formula manufacturing plants at full tilt all summer, hoping to hold on to the market share it has gained at Abbott’s expense. Its market share has climbed to nearly 60 percent from 35 percent before the recall, said Robert Cleveland, who oversees the Mead Johnson nutrition business at Reckitt.

“We remain committed to making as much formula as we can,” Mr. Cleveland said. “We continue to maximize our domestic manufacturing, running overtime and going 24/7.” He added that the company had received approval to bring in formula from its plants in Singapore and specialty formula from its facilities in Mexico.

Still, in late August, when Lori Sharp, a first-time mother in Port Hueneme, Calif., realized she was down to one container of Reckitt’s Enfamil Sensitive infant formula for her 3-month-old daughter, the formula was out of stock on Walmart.com.

Panicking, she scoured more websites and widened her geographic search. She eventually discovered a container of formula at a Target 40 minutes away in Moorpark, Calif. “I went into the store and they actually had four more, but their shelves were so bare,” Ms. Sharp said. “I bought all of them.”

In Georgia, some of the most acute shortages are in rural areas. Jennifer Kelly, who is the family services manager at the early Head Start program in Swainsboro, which is between Macon and Savannah, said trying to find formula earlier this summer had become a “daily chore.”

The 14 babies she watches drink seven different kinds of formula. She and her staff were often driving to Walmart, Walgreens or a local grocery chain or scouring Amazon for some of the more obscure brands.

“It’s not like it was a few months ago when the shelves were bare,” Ms. Kelly said. “I am hoping we are on the other side of this dilemma.”

When the formula shortage was at a crisis point in May, Ms. Robinson of Bucks County, Pa., created a Facebook group that connected parents around the country. The group, called Formula Hunters, does not exchange money to keep out profiteers who have been hoarding formula and seeking to resell it at a markup.

The group operates on the notion that a parent who buys a hard-to-find formula brand and sends it to another parent in the group will eventually be repaid when others do the same for them.

Formula Hunters now has 1,500 members, who are still actively helping each other locate formula. “This has been going on for so many months,” Ms. Robinson said. “The frustration has been high.”

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Why Does Swiss Cheese Have Holes In It?

Swiss cheese used to be turned down by cheesemakers, but now those holes you see have become a distinct feature in the cheese.

Cheese is always “grate.

I mean, when you have cheese, it’s the sign you’re having a “gouda” day and you could “disa-brie” … I mean, disagree.

But everything is always “cheddar” — excuse me — better, with cheese.

Okay, okay, a little cheesey, I know.

When it comes to Swiss cheese, it feels like something is missing.

Why does it have holes?

First off, the cheese experts actually call those holes “eyes.”

And they’re caused by carbon dioxide bubbles that form in the cheese.

Time to put on our scientist cap and put Swiss cheese under the microscope.

Bacterial culture called “propionibacterium”— or “props” for short, are behind the eyes.

This bacteria is in hay, grass and soil and ends up in milk from cows.

That milk makes its way to a cheese factory where it’s standardized, pasteurized, and brined.

After that, the cheese sits in a warm room which helps the props form those carbon dioxide bubbles.

Those bubbles are left alone while the cheese ferments, resulting in its eyes.

The holes used to be seen as a deformity, and cheesemakers tried to get rid of them.

But today, they’re a distinct part of Swiss cheese.

In fact, the cheese industry even pays the government to rate its cheese.

Grade-A Swiss cheese has eyes that are between three-eights of an inch and thirteen-sixteenths of an inch in diameter.

And with more than 300 million pounds of Swiss cheese produced annually in the U.S. — that’s a lot of eyes.

Source: newsy.com

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Over 1,000 Lufthansa Flights Canceled As Staff Strikes In Germany

By Associated Press

and Newsy Staff

and Trent Murray
July 27, 2022

The ver.di service workers’ union announced the strike Monday and is seeking a 9.5% pay increase for about 20,000 employees.

More than 1,000 Lufthansa flights were canceled Wednesday because of a one-day strike by the airline’s German ground staff, affecting tens of thousands of passengers in the latest travel turmoil to hit Europe.

About 134,000 passengers had to change their travel plans or cancel them altogether. At least 47 connections were canceled Tuesday, German news agency dpa reported.

Lufthansa’s main hubs in Frankfurt and Munich were most affected, but flights were also canceled in Duesseldorf, Hamburg, Berlin, Bremen, Hannover, Stuttgart and Cologne.

Michael Probst / AP

The airline advised affected passengers not to go to airports because most service counters would be unstaffed. Airport terminals were unusually empty during the early morning hours, but people lined up at ticket counters later trying to find replacements for their canceled flights, dpa reported.

Many of the stranded passengers had arrived in Germany from abroad to find out that their connecting flights were grounded due to the walkout.

At Frankfurt airport, 725 of 1,160 scheduled flights were canceled for the day, according to a spokesperson for airport operator Fraport. Flights operated by other airlines, which are usually supported by Lufthansa ground staff, were also affected, dpa reported.

Flights operated by Lufthansa Group companies such as Swiss International Air Lines, Austrian Airlines, Brussels Airlines and Italian regional airline Air Dolomiti were also canceled. In addition, planes from Croatia Airlines, United Airlines, Air Canada and Poland’s LOT were unable to take off, dpa reported.

The ver.di service workers’ union announced the strike Monday as it seeks to raise pressure on Lufthansa in pay negotiations for about 20,000 employees of logistical, technical and cargo divisions of the airline.

“Lufthansa did not make an adequate offer in the first two rounds” of negotiations, a union spokesperson, Dennis Dacke, said Wednesday.

“It is time for the employees to express their opinion now before the third round of negotiations,” Dacke said. “This is a ‘warning strike,’ and the effects are visible. We hope that Lufthansa will not provoke another one in the future.”

Lufthansa spokesperson Martin Leutke criticized the strikes as harmful.

“People who wanted to travel, who planned vacations for a long time, who waited for vacations, had these vacation dreams unfortunately postponed … maybe even destroyed by the strike,” Leutke told reporters in Frankfurt. “This strike is completely unnecessary. It is also completely exaggerated.”

Airports in Germany and across Europe were already seeing disruption and long lines for security checks because of staff shortages and soaring travel demand.

As inflation soars, strikes for higher pay by airport crews in France and Scandinavian Airlines pilots in Sweden, Norway and Denmark have deepened the disruption. Travelers have faced last-minute cancellations, lengthy delays, lost luggage or long waits for bags in airports across Europe.

The Lufthansa strike started Wednesday at 3:45 a.m. local time and is set to end Thursday at 6 a.m.

Ver.di is calling for a 9.5% pay increase this year and says an offer by Lufthansa earlier this month, which would involve a deal for an 18-month period, fell far short of its demands.

Additional reporting by The Associated Press.

Source: newsy.com

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Credit Suisse expected to announce Koerner as CEO, replacing Gottstein – sources

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July 26 (Reuters) – Credit Suisse Group AG (CSGN.S) is expected to announce Ulrich Koerner as its new chief executive, the latest management churn at the Swiss bank as it struggles to recover from a series of scandals, two sources familiar with the situation said on Tuesday.

Pressure had been mounting on current CEO Thomas Gottstein for months over major scandals and losses racked up during his two-year tenure that have hammered shares and angered investors. In recent months some investors had called for replacing Gottstein, but the bank resisted.

Another senior executive, Christian Meissner, head of the lender’s investment bank, is also planning to leave the group, the Financial Times reported.

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One of the sources said the bank was expected to announce the change in CEO on Wednesday along with its quarterly results.

Credit Suisse declined to comment. Meissner did not respond to requests for comment from Reuters.

When Gottstein took the helm in 2020, he promised a “clean slate” for the bank, which was recovering from an internal spying scandal that cost his predecessor Tidjane Thiam his job.

Since Thiam left in February 2020, the stock is down nearly 60% and troubles at the bank have only escalated. In 2021, the bank disclosed a $5.5 billion loss from the unraveling of U.S. investment firm Archegos and the collapse of $10 billion worth of supply chain finance funds. The events prompted management ousters, investigations, and a capital increase – followed by further losses and fresh legal cases. read more

Credit Suisse brought in Koerner in April 2021 to lead its newly separated asset management division following the collapse of the $10 billion worth of supply chain finance funds linked to insolvent financier Greensill Capital.

Koerner returned to Credit Suisse from arch-rival UBS, where he most recently served as adviser to the CEO from 2019 to 2020. He ran UBS Asset Management from 2014 to 2019. Koerner was previously a senior executive at Credit Suisse Financial Services and ran the Swiss business. read more

Koerner, who used to work for McKinsey, is considered a restructuring expert in Switzerland.

Nevertheless, the appointment would follow other major European banks where diversity at the top has been lacking. The 25 biggest banks by assets have seen 22 changes in chief executive and chair over the past two years according to a Reuters review of senior industry roles. Twenty-one of those 22 jobs went to men. read more

This spring, Credit Suisse’s chairman Axel Lehmann reiterated his support for Gottstein after Artisan Partners, the bank’s ninth-largest shareholder, had publicly called for Gottstein to be replaced. read more

“I fully back him because he is good,” Lehmann said in a CNBC interview at the World Economic Forum meeting in Davos. He dismissed as “rumors and speculations” talk that Gottstein could be on his way out.

The WSJ earlier reported that Gottstein may soon be replaced, days after Swiss newspaper SonntagsZeitung reported the bank is considering further cost cuts. read more

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Reporting by Oliver Hirt in Zurich, Shivam Patel in Bengaluru and Elisa Martinuzzi in London; Additional writing by Megan Davies; Editing by Devika Syamnath and Richard Pullin

Our Standards: The Thomson Reuters Trust Principles.

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Europe’s central banks jack up interest rates to fight inflation surge

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  • SNB unexpectedly hikes by half a percent
  • Bank of England raises rates by 25 bps
  • Hungary unexpectedly lifts one-week deposit rate
  • Inflation painfully high and not yet peaking

BERN/LONDON, June 16 (Reuters) – Central banks across Europe raised interest rates on Thursday, some by amounts that shocked markets, and hinted at even higher borrowing costs to come to tame soaring inflation that is eroding savings and squeezing corporate profits.

Fuelled initially by soaring oil prices in the wake of Russia’s invasion of Ukraine, inflation has broadened out to everything from food to services with double digit readings in parts of the continent.

Such levels have not been seen in some places since the aftermath of the oil crisis of the 1970s.

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The Swiss National Bank and the National Bank of Hungary both caught markets off guard with big upward steps, just hours after their U.S. counterpart the Federal Reserve lifted rates by the most in almost three decades. read more

The Bank of England meanwhile lifted borrowing costs by the quarter point markets had expected. read more

The moves come just a day after the European Central Bank agreed plans in an emergency meeting to contain borrowing costs in the bloc’s south so it could forge ahead with rates rises in both July and September. read more

“We are in a new era for central banks, where lowering inflation is their only objective, even at the expense of financial stability and growth,” George Lagarias, Chief Economist at Mazars Wealth Management said.

The day’s biggest moves came in Switzerland where the SNB raised its policy rate to -0.25% from the -0.75%, a step so large, not a single economist polled by Reuters had predicted it.

The first SNB hike since 2007 is unlikely to be the last, however, and the bank could be out of negative territory this year, some economists said.

“The new inflation forecast shows that further increases in the policy rate may be necessary in the foreseeable future,” SNB Chairman Thomas Jordan told a news conference.

The Swiss franc jumped almost 1.8% against the euro on the decision and was headed for the biggest daily rise since January 2015 when the SNB unhooked the franc from its euro peg.

TIGHTROPE

In London, the Bank of England was more cautious but said it was ready to act “forcefully” to stamp out dangers posed by an inflation rate heading above 11%. read more

It was the fifth time that the BoE has raised borrowing costs since December and the British benchmark rate is now at its highest since January 2009.

Three of nine rate setters however voted for a bigger, 50 basis point increase, suggesting that the bank will be under pressure to keep raising rates, even as economic growth slows sharply.

“Central bankers are teetering along a tightrope, with the biggest concern that raising rates too quickly could tip economies into recession,” Maike Currie, Investment Director for Personal Investing at Fidelity International said.

“Monetary policy tightening is a very blunt tool to manage a very precarious situation.”

Despite the hike, sterling fell sharply as some in the market had bet on a bigger move given the Fed’s 75 basis points hike the previous evening. The weaker currency, however, means higher imported inflation and further pressure to raise rates. read more

The pound was last at $1.2085 against the dollar, down three quarters of a percent on the day.

In Budapest meanwhile, the Hungarian central bank unexpectedly raised its one-week deposit rate by 50 basis points to 7.25% at a weekly tender, also to tame stubbornly rising inflation now running in double-digits.

Barnabas Virag, the bank’s deputy governor said the increase far was from the last and the bank would continue its rate hike cycle with “predictable and decisive” steps until it sees signs that inflation is peaking, probably in the autumn.

The hike also comes as the nation’s currency has lost close to 7% of its value this year, increasing inflation further via higher import prices.

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Writing by Balazs Koranyi in Frankfurt; Additional reporting by William Schomberg in London, Krisztina Than in Budapest, Mike Shields and Silke Koltrowitz in Zurich; Editing by Toby Chopra

Our Standards: The Thomson Reuters Trust Principles.

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