Credit Suisse Group AG yesterday posted its biggest annual loss since the 2008 global financial crisis and the scandal-plagued Swiss banking giant expects to fall deeper into the red this year.
Switzerland’s second-largest bank, which unveiled a dramatic restructuring plan in October last year aimed at stopping the rot, reported a net loss of 7.3 billion Swiss francs (US$7.96 billion) for last year.
The Zurich-based lender lost more than 8 billion Swiss francs during the global financial crisis 15 years ago.
Photo: Reuters
Citing the impact from restructuring charges and its exit from non-core businesses, Credit Suisse said in a statement that it “would also expect the group to report a substantial loss before taxes in 2023.”
Those restructuring costs are estimated at about SF1.6 billion this year and SF1 billion next year.
Last quarter, net loss attributable to shareholders amounted to nearly SF1.4 billion, slightly better than what had been feared.
The bank also recorded net asset outflows of SF110.5 billion in the fourth quarter alone.
“We’ve seen a reversal in January,” Credit Suisse chief financial officer Dixit Joshi told reporters, explaining that capital outflows were mainly concentrated in October, but slowed in December.
The bank unveiled a dramatic restructuring plan at the end of October last year, focused on drastically reducing the scale of its investment banking unit, at the heart of a string of scandals.
Among the changes, it decided to revive its First Boston brand, named after a US investment bank it absorbed in 1990, bringing together its capital market and advisory activities.
The bank yesterday announced the acquisition of the investment banking business of M. Klein & Co for US$175 million, thus taking a step to transform its investment banking arm.
Credit Suisse’s capital-guzzling investment banking arm has been a source of heavy losses that plunged its accounts into the red, eclipsing its more stable activities such as wealth management and Swiss domestic banking services.
Under the bank’s revamp, Credit Suisse plans to refocus on its most stable activities and reduce its merchant banking.
“2022 was a crucial year for Credit Suisse,” CEO Ulrich Korner said.
“We announced our strategic plan to create a simpler, more focused bank, built around client needs and since October we have been executing at pace,” he said.
“We have a clear plan to create a new Credit Suisse and intend to continue to deliver on our three-year strategic transformation by reshaping our portfolio, reallocating capital, right-sizing our cost base and building on our leading franchises,” he added.
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