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Credit Suisse losses rise.

 A poor fourth quarter has taken annual losses to SFr7.3bn and laid bare the scale of the chal­lenge the

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Swiss bank faces in restor­ing its for­tunes.—Credit Suisse yes­ter­day repor­ted its most significant annual loss since the 2008 fin­an­cial crisis, lay­ing bare the scale of the chal­lenge it faces in restor­ing its for­tunes.

The bank recor­ded a SFr1.4bn loss for the fourth quarter, as invest­ment bank­ing rev­en­ues slumped and cli­ents pulled money from the group’s wealth-man­age­ment busi­ness.

The bruis­ing period took the bank’s annual loss to SFr7.3bn.

Cus­tom­ers with­drew SFr111bn in the final three months of the year, with two-thirds of the out­flows com­ing in Octo­ber when rumours hit the bank on social media about its fin­an­cial health.

The wealth-man­age­ment busi­ness accoun­ted for SFr92.7bn of the out­flows in the quarter, the bank said, sur­pass­ing the SFr61.9bn expec­ted by ana­lysts.

Credit Suisse’s shares dropped 10 per cent yes­ter­day to SFr2.90, hav­ing fallen more than 60 per cent over the past year and hit an all-time low of SFr2.70 in Decem­ber.

The lender is embark­ing on a rad­ical restruc­tur­ing in an attempt to draw a line under a series of crises and return to profit. Under the plan, the group is axing 9,000 of its 52,000-strong work­force, spin­ning off its invest­ment bank in a move that will also revive the First Boston name, and beef­ing up its wealth­man­age­ment busi­ness.

«Credit Suisse man­age­ment is under­go­ing a very dif­fi­cult and com­plex pro­cess of restruc­tur­ing,» said JPMor­gan ana­lyst Kian Abouhos­sein. «The fran­chise is deteri­or­at­ing so far faster than expec­ted and seems to be ongo­ing».

The bank yes­ter­day warned it expec­ted another «sub­stan­tial loss» in 2023 as it absorbed restruc­tur­ing costs.‘This is a year when it bears a large brunt of the restruc­tur­ing expenses out of our stra­tegic plan.’

It is a shame that Heath Robin­son and Rube Gold­berg are no longer around to provide Credit Suisse with a new logo.

Both artists spe­cial­ised in over­com­plex solu­tions to simple prob­lems.

Chief exec­ut­ive Ulrich Körner has been tak­ing a sim­ilar approach to reen­gin­eer­ing the sham­bolic Swiss lender into a pro­du­cer of steady returns.

Plenty of cogs and drive­shafts flew loose dur­ing 2022. The bank repor­ted annual losses of SFr7.3bn yes­ter­day. Cli­ent out­flows were much worse than expec­ted at SFr113bn. These mainly came from wealth man­age­ment, which should be a reli­able earner. Shares fell 13 per cent on the day but remained above last year’s record lows.

Investors are right to be spooked by out­flows. The liquid­ity drain sapped the bank of about one-third of its depos­its. Man­age­ment said depos­its began to return dur­ing Janu­ary. But no fig­ures on this resur­gence, or the cost in interest, were avail­able. Out­flows were coun­ter­bal­anced by new fund­ing from bond sales totalling $5bn and a rights issue that yiel­ded SFr4bn. In addition, the sale of the secur­it­ised products group to Apollo added a fur­ther SFr800mn for the first quarter of this year.

Investors should be less wor­ried by erratic rev­en­ues from invest­ment bank­ing.

www.sba.tax

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Comments

  1. Charlie10 February 2023 at 14:05

    I'm not sure if Credit Suisse can last another 1-2 years at this rate. They need to put steps in action and change people's view on them while attracting investments. Otherwise their downfall will be permanent and it will come soon.

    ReplyDelete
    Replies
    1. Mike10 February 2023 at 14:59

      They are not doing a good job on social media or anywhere else. It's a leadership problem. They need to show people that they aren't going anywhere, to take some losses now but to give more to people to encourage them to stay. It won't be easy but it can be done.

      Delete

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