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Credit Suisse appoints Ulrich Koerner as CEO, kicks off strategic review as losses deepen


The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland on March 24, 2021.

Arnd Wiegmann | Reuters

Credit Suisse announced on Wednesday that Chief Executive Thomas Gottstein will step down as the bank reports a massive loss for the second quarter, due to poor investment banking performance and increased litigation terms affecting earnings. import.

The bound Swiss bank posted a net loss of 1.593 billion Swiss francs ($1.66 billion), far below consensus expectations among analysts for a loss of 398.16 million Swiss francs.

In a statement on Wednesday, Gottstein said second-quarter results were “disappointing” and that the bank’s performance was “significantly influenced by a number of external factors, including geopolitics, macroeconomics, market size and trends.”

“The urgency of decisive action is clear and the comprehensive review to strengthen our pivoting role across the Wealth Management, Swiss Banking and Wealth Management businesses,” he said. , powered by the fundamental transformation of our Investment Bank,”

“Today marks a leadership change for Credit Suisse. It has been an absolute privilege and honor to have served Credit Suisse for the past 23 years. It has been my passion since day one of the service. provide the best service to our customers.”

Gottstein, who took power in early 2020 following the resignation of his predecessor Tidjane Thiam after spy scandalwill be replaced by Ulrich Koerner, formerly CEO of the bank’s wealth management division.

Credit Suisse President Axel Lehmann in May gave full support to Gottstein and denied reports that the board had discussed replacing him. He told CNBC on Wednesday that Gottstein was “a great man” who did a “great job,” but that two key changes have arisen since the World Economic Forum conversation. world in Davos.

“We first embarked on a thorough strategic review and today we are announcing that we are accelerating the transition and Thomas has decided that at the time, also for personal reasons, it’s better to make changes,” Lehmann said, adding that Gottstein was “instrumental” in developing strategic assessment.

“He’s totally behind it, but at a certain point you need to have full energy, and I think at that point he and I felt it was better to change and bring someone like Ulrich Koerner, who has, I think, a great track record of converting operations.”

Winning investment bank

The investment bank was hit by significantly lower capital markets issuance and reduced customer activity, Credit Suisse said in a summary on Wednesday, acknowledging that the division’s positioning “did not aims to benefit from volatile market conditions” and its areas of strength, such as capital markets, have been “significantly impacted.”

The group’s net revenue fell 29% year-on-year mainly due to a 43% drop in investment banking revenue and a 34% drop in wealth management revenue, while asset management revenue also fell 25%.

Credit Suisse warned in its report: “For Investment Banking, while we have a robust trading system, these transactions can be difficult to execute in the current market environment.”

“Trading to date in Q3 22 has been marked by continued weakness in customer activity, exacerbating the usual seasonal decline, and we expect the division to report a loss. more this quarter.”

Operating expenses increased 10% year-on-year and included the main litigation provisions of 434 million Swiss francs related to a variety of legal issues.

Chain of scandals

Wednesday’s dismal earnings report comes after a net loss of 273 million Swiss francs in the first quarter, due to Russia-related losses and continued litigation costs arising from Archegos . hedge fund scandal dent the bank’s income.

In the second quarter of 2021, Credit Suisse’s net income reached 253 million Swiss francs, down 78% year-on-year, following a loss of 4.4 billion francs following the collapse of Archegos.

Credit Suisse warns in early June that it is likely to lose money this quarter, given the worsening geopolitical situation, aggressive monetary policy tightening from central banks, and the cancellation of stimulus measures from the Covid-19 era.

At the time, the bank said the combination of these adverse conditions had caused “constantly increased market volatility, weak customer flows and continued customer write-offs, especially in in the APAC region.”

Despite the challenging context, Credit Suisse announced at Investor Deep Dive event at the end of June at the forefront of improving compliance and risk management, launched after a series of scandals and aimed at reforming the risk, compliance, technology and operations functions, along with the business Asset Management.

Other highlights:

  • The group’s revenue reached 3,645 billion Swiss francs, down from 5.103 billion in the same period last year.
  • The capital ratio CET1, a measure of a bank’s solvency, was 13.5%, compared with 13.7% at the same time last year.

Banks also face a potential $600 million raised from a lawsuit in Bermuda related to its local life insurance branch, as legacy scandals continue to affect its balance sheet.



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