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[ZURICH] Credit Suisse Group AG's share price reflects a capital hole of 13 billion Swiss francs (US$14.1 billion), analysts at Barclays Plc said in a note to clients.
"The current level of discount for Credit Suisse is reflecting, to a large extent, concerns over its capital adequacy - particularly the leverage ratio," Barclays analysts Mike Harrison, Aman Rakkar and Jeremy Sigee said in the note Friday. The sum of the parts valuation "suggests to us that much of the concern over the capital position is already reflected in the share price," they said.
Credit Suisse has the second-lowest ratio of capital to risk-weighted assets among 11 banks analysed by Barclays, and is trailed only by Deutsche Bank AG.
Its leverage ratio, which measures capital to total assets, was the weakest in the group. An additional 13 billion francs of equity would boost this ratio to the second-highest among the European banks in the peer group, the analysts said.
The Swiss National Bank urged Credit Suisse and UBS Group AG, Switzerland's two biggest banks, to boost their leverage ratios in its financial stability report Thursday. The arrival of Chief Executive Officer Tidjane Thiam at Credit Suisse next month has stoked speculation of a capital increase.
The leadership change "naturally creates questions over the strategic direction of the group," the note said.
The bank trades at a higher discount to the sum of its parts than the average over the past five years, while UBS is in line with the average, the analysts said.