Credit Suisse Group posted its first fourth-quarter net loss since 2008 as Switzerland’s second--biggest bank continued its drive to reduce its exposure to potentially risky investment banking at a time when Europe’s economy is facing problems related to a raging debt crisis.
The bank yesterday said its net loss in the fourth quarter amounted to 637 million Swiss francs (US$698 million), way down on analysts’ expectations for a more modest loss of SF431 million.
In the equivalent period in 2010, Credit Suisse posted a SF841 million profit.
Brady Dougan, chief executive officer of a bank that has about 50,000 staff around the world and manages more than US$1 trillion in assets, blamed the loss on tough market conditions and aggressive cuts in costs and risks, including the need to meet a new requirement that it hold more capital.
“Our performance for the fourth quarter 2011 was disappointing,” Dougan said. “It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements.”
Dougan said an acceleration in its restructuring program cost the bank almost SF1 billion in the last quarter.
One of the most important changes stems from Credit Suisse’s attempt to cut the risk profile of it investment bank division. In November last year, Credit Suisse said that by the end of 2014, it would have cut risk-weighted assets by SF110 billion, mostly from the investment bank’s fixed-income unit.
Its investment bank saw revenues decline 64 percent in the fourth quarter, and that pushed the unit to its second consecutive quarterly loss.
Following confirmation of its quarterly loss, chief financial officer David Mathers told reporters the bank would propose a dividend of 75 centimes a share for last year, down from SF1.30 a share for the previous year.
Credit Suisse faces similar structural problem as crosstown rival UBS AG and has yet to close the book on a US tax evasion probe.
Mathers said he had no new comment on the tax probe.
On Tuesday, UBS AG, Switzerland’s biggest bank, reported that its profit fell 76 percent in the fourth quarter. The bank was hurt by a US$2 billion trading scandal last year and has been downsizing its investment bank to meet stricter capital requirements as Europe’s debt crisis hits the financial sector.