Credit Suisse disappoints expectations

Credit Suisse had a slow start to the year, in line with the recent profit warning. Forced to reduce its risks after the Archegos and Greensill cases, the number two Swiss bank saw its revenues plummet as the war in Ukraine and provisions increased its burden.

“The first quarter of 2022 was marked by volatile market conditions and aversion to customer risk,” CEO Thomas Gottstein said in a press release on Wednesday. This unfavorable environment, together with the refocusing of Credit Suisse and the accumulation of lawsuits, led to a worse first quarter than expected by the financial community.

Falling Revenue

The number two Swiss bank thus suffered a net loss of 273 million francs, higher than the loss of 231 million in the first quarter of 2021.

Also read: Credit Suisse back in the red

The pre-tax profit was -428 million francs, compared to -757 million earlier, the bank said on Wednesday. Revenues fell 42% to 4.41 billion and operating expenses increased 26% to 4.95 billion, weighed down by a 703 million increase in litigation costs during the quarter.

Russia’s invasion of Ukraine weighed 206 million francs on Credit Suisse’s first partial result. In addition, there is a negative impact of 353 million linked to the interest in Allfunds. Credit Suisse was able to offset these negative effects with real estate gains of 164 million.

Decreased exposure to Russia

These elements are in line with figures released during last week’s profit warning. However, the dissolution of provisions related to the Archegos affair amounted to 155 million francs, less than the 170 million initially announced.

The major bank’s net exposure to Russia was cut to 373 million francs at the end of March, down 56% over three months. Credit exposure to Russian institutions has fallen by 67% and efforts in this direction continue, assures Credit Suisse.

Our large size: How Credit Suisse Lost Control

The net worth of the group’s Russian branches was about 200 million francs at the end of March, a decrease of 16 million francs on a quarterly basis.

In the press release, Mr. Gottstein recalled that 2022 will be a “year of transition” for Credit Suisse. The strategic shift that has been made – with an emphasis on asset management at the expense of investment banking – should start to bear fruit next year.

Monetary policy tightening and the war in Ukraine have sharply reduced risk appetite in financial markets, which will negatively impact customer activity. This will affect the asset management division and issuance volumes in investment banking, the bank warns with two veils.

Confirmed departures

Repeated scandals have clearly taken hold of several members of the general management. The two-veiled bank has confirmed several departures this weekend announced in the press, most notably that of chief financial officer (CFO) David Mathers.

For example, a page is being turned for David Mathers, who has taken on the functions of CFO since 2010, remembers the number two Swiss bank on Wednesday. Since 2010, he has also been Chief Executive Officer (CEO) of Credit Suisse International. Mr Mathers will remain in office until the arrival of his successor.

Romeo Cerutti, legal director for more than a decade, will also step down. He will be replaced on July 1 by Markus Diethelm, who previously held the same position at UBS between 2014 and 2021.

Also read: Credit Suisse: Greensill case settlement could last five years

Francesca McDonagh will succeed Francesco De Ferrari as head of the Europe, Middle East and Africa (EMEA) region on October 1. Mr de Ferrari has held the position on an interim basis since January 2022, in addition to being responsible for the fortune department. The future Emea chief has been working for Credit Suisse since 2017. She was previously chief executive of Bank of Ireland and also held senior positions at HSBC.

Credit Suisse has appointed Edwin Low as head of the Asia-Pacific (APAC) zone on June 1, replacing Helman Sitohang. Mr. Low, who joined Credit Suisse in 1996, is the current joint director of the Singapore-based investment banking region Apac, and also serves as CEO for the South East Asia business.

many disappointments

These departures confirm information published in the Sunday press this weekend that reports departures from the general management, in particular those of David Mathers, Romeo Cerutti and Helman Sitohang. These three officers are by far the ones who have served the longest on the bank’s executive committee with two veils.

Recently, the criticism of Mr Cerutti has become more audible, in particular because of the trial in Bermuda, which NZZ am Sonntag† A court in that jurisdiction recently convicted a local insurance subsidiary, Credit Suisse Life Bermuda, in a dispute with billionaire and former Georgian Prime Minister Bidzina Ivanishvili. The major bank appealed the decision.

This affair added to the list of disappointments that the number two Swiss bank has suffered since the spring of 2021, mainly the Archegos scandals – which have cost the bank almost 5 billion francs – and Greensill, as well as the resignation of the ex-president. António Horta-Osório after non-compliance with the Covid quarantine rules.

The Zurich banking giant announces the three departures on the sidelines of the presentation of its first quarter figures, even more loss-making than expected by the financial community. In particular, the increase in legal provisions and the war in Ukraine weighed on the results. Credit Suisse issued a profit warning last week.

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