Credit Suisse Group warns of net loss in fourth quarter of last year

  • Reuters, ZURICH, Switzerland

Credit Suisse Group AG said yesterday it was likely to suffer a net loss in the fourth quarter as the scandal-hit lender reported new legal charges and said activity in its trading and wealth management divisions had slowed .

“Fourth quarter 2021 earnings will be negatively impacted by litigation provisions of approximately 500 million Swiss francs [US$545 million], partly offset by gains on real estate sales of 225 million Swiss francs,” the beleaguered lender said in a statement, adding that the legal blows were mainly related to the settlement of cases inherited from its investment banking activity.

Combined with other charges, he said that should result in a reported pre-tax profit or loss “approximately break-even” for the fourth quarter.

Photo: Reuters

Credit Suisse has tried to turn the page on a slew of negative headlines and reform its risk management culture, an effort delayed by the abrupt departure of the chairman appointed nine months earlier to lead this transformation.

Switzerland’s second-largest lender announced plans in November to rein in its investment bankers and pour money into looking after the fortunes of the world’s rich, as it tries to rein in a freewheeling culture that cost him billions in a series of scandals.

It said at the time that it planned to take a 1.6 billion Swiss franc write-down in the fourth quarter on the remaining investment banking-related goodwill on its books.

Credit Suisse said yesterday that its investment bank would also be affected by a slowdown in transaction-based revenue.

“Combined with the reduction in our overall risk appetite, including our decision to substantially exit our prime services business, this resulted in a fourth quarter 2021 loss in the Investment Bank division (before goodwill impairment) “said the lender.

It said its core wealth management business, which it was trying to shore up, would also be impacted by a slowdown in transactions, which would result in “moderately negative” net new assets for those businesses, “although more than offset by entries into our assets”. Management company.

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Ann J. Cox