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Credit Suisse (CS) Severs Ties With Some Clients in Venezuela

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Per a Bloomberg article, Credit Suisse (CS - Free Report) has ended relationship with some of the rich Venezuelan clients as it considers the region to be risky for business on account of “politically-exposed clients in the sanctions-hit country”.

Banks on a global level are under strict supervision regarding their practices, and Venezuela is no different in this regard. Last year the United States upped sanctions owing to Venezuela’s oil industry. Also, Switzerland and other European countries are said to have imposed sanctions on Venezuelan officials.

Per the article, Credit Suisse has cut down assets managed for Venezuela’s wealthy clients to $2 billion, which is less than half of what it managed few years back.

In August 2020, UBS Group (UBS - Free Report) had reduced exposure in the country by cutting ties with a number of accounts with links to Venezuela’s government or to Petroleos de Venezuela, the state-owned oil company. The move came post an in-depth review, which led to conclusion that some relationships did not justify the compliance risks.

Notably, Credit Suisse would refrain from getting into any more legal trouble. Last month, the Federal Reserve had served the lender with an order to improve on its anti-money laundering policies due to loopholes in Credit Suisse USA's compliance risk management program.

Our Take

We believe the ongoing regulations and controls on banks will be a step forward in improving risk and compliance policies, aiding in the reduction of illegal activities.

Credit Suisse’s top line remains under pressure due to persistent negative interest rates in the domestic economy. Nevertheless, restructuring initiatives in order to invest in profitable areas to better serve clients are encouraging.

Over the past six months, shares of Credit Suisse have gained 31.2% compared with 25.7% growth recorded by the industry.

Currently, Credit Suisse carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Shinhan Financial Group Co Ltd (SHG - Free Report) has witnessed upward earnings estimate revisions for 2020 in the past 60 days. Moreover, this Zacks #1 Ranked stock has gained 19.3% in six months’ time.

Bank Of Montreal’s (BMO - Free Report) current fiscal-year earnings estimates have moved north in 60 days’ time. Further, the company’s shares have appreciated 45.3% over the past six months. At present, it holds a Zacks Rank of 1.

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