The agency also blamed the economic slowdown in the Asia-Pacific region which it said would put pressure on the lender's new business model.

"We expect execution of strategic restructuring to remain more challenged by prevailing unfavourable fixed income and equities capital markets than was the case when it was announced in October last year, particularly in Europe and Asia," it said.

Earlier this month Switzerland's second-biggest bank posted a second straight quarterly loss, in its worst start to a year since the financial crisis.

The bank's mark-to-market losses in these two quarters were related mainly to securitised products, distressed credit and certain underwriting positions, Fitch said.

But the planned exit from distressed credit and European securitised trading, and sharp reduction in these exposures, would help earnings, it added.

Credit Suisse said the ratings agency acknowledged the positives in some of the bank's strategies.

"They recognise that our strategy of growing the wealth management business in Asia Pacific is showing signs of success, and that efforts to reduce fixed costs and capital consumption should improve earnings stability in the medium term," the bank said in a statement.

While noting the positives in the wealth management business, Fitch said the current year's performance would be weighed down by subdued client activity in debt and equity capital markets, larger-than-expected restructuring costs and an initially significant drag from activities earmarked for wind-down and booked in the strategic resolution unit.

Last year, Credit Suisse unveiled plans to raise 6 billion Swiss francs (4.1 billion pounds)

) from investors, slim down its investment bank and cut jobs in the biggest overhaul in almost a decade.

While the expected settlement of U.S. mortgage matters during 2016 should remove much of the uncertainty, Fitch said it expects conduct and litigation risk would remain material contingent liabilities for the foreseeable future.

Fitch also downgraded the long-term default rating of subsidiaries Credit Suisse International and Credit Suisse (USA) Inc. to A-minus from A.

(Reporting by Umesh Desai; Editing by Stephen Coates)