Home / Companies / Company Results /  Credit Suisse loss eats into capital buffers

Credit Suisse Group AG will replace several top executives, including its chief financial officer, and said tough business conditions that caused a loss last quarter will persist in the months ahead.

Credit Suisse had said 2022 would be a year of transition and warned investors last week that it would post a first-quarter loss because of rising legal costs. The bank posted a $284 million net loss for the first quarter, mainly because of $730 million in provisions for lawsuits

At the end of the quarter, its main capital ratio slipped to 13.8%—from 14.4% at the end of December—and below a bank-set 14% target. Unless the bank returns to profitability, the drop in its capital could weigh on its ability to conduct buybacks and pay dividends.

Results for the same quarter a year earlier were saddled by $5 billion in losses from exiting stock positions of family office Archegos Capital Management. The Archegos losses triggered a rethink on risk at the bank and led to the departure of many top executives a year ago.

The shuffle at the top of Credit Suisse continued Wednesday when the bank said longtime Chief Financial Officer David Mathers will leave when a successor is found.

Credit Suisse has been restructuring its businesses for around a decade since the financial crisis and continues to be encumbered by litigation and regulatory probes stemming from that period.

Its stock is down around 28% this year. It fell 0.5% Wednesday.

Credit Suisse Chief Executive Thomas Gottstein said the bank is safer now but that the shift away from servicing hedge funds in the wake of Archegos contributed to around $250 million lost net revenue in the quarter. Mr. Mathers said the bank’s capital ratio should rise back above 14% in about six months from some subsidiaries paying dividends.

Mr. Gottstein said the effects of Russia’s war in Ukraine accounted for around $154 million coming off its revenue and caused a $60 million charge for credit losses. Credit Suisse’s remaining net-credit exposure to Russia is around $387 million, Mr. Gottstein said. Credit Suisse’s wealth management business also underwent a broad slowdown.

Among the other personnel changes Wednesday is Francesca McDonagh, CEO at Bank of Ireland Group PLC, joining as head of Europe, the Middle East and Africa by Oct. 1. The job is being filled temporarily by the bank’s wealth-management head.

Credit Suisse’s head of Asia, Helman Sitohang, will leave his role June 1 and is being succeeded by a bank veteran, Edwin Low. Mr. Sitohang will remain at the bank as a senior adviser to Mr. Gottstein.

General counsel Romeo Cerutti is retiring and being succeeded by Markus Diethelm, former general counsel at crosstown rival UBS Group AG.

The bank’s legal strategies have been a focus for investors as settlement costs wiped out profit in some recent periods.

On Wednesday, Mr. Gottstein said the bank under Mr. Cerutti’s legal guidance had won the dismissal of more than 80 legal cases since 2020 and settled 12 civil lawsuits, including in relation the toxic securities. He said it was a faster pace of working through the legal roster than in previous years.

Executives said the legal provisions Wednesday don’t relate to lawsuits over investment funds Credit Suisse ran with Greensill Capital, a key financing partner which went bankrupt in March 2021.

On Friday, shareholders will vote on whether the bank should conduct a special audit into its handling of Greensill Capital, and the recent “Swiss Leaks" of bank data. Norges Bank Investment Management, the sovereign-wealth fund operated by the Norwegian central bank, said Sunday it supports a Swiss foundation’s proposal for an audit.

This story has been published from a wire agency feed without modifications to the text


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