Credit Suisse projects $1.6 billion fourth-quarter loss as it embarks on strategy overhaul
Credit Suisse on Wednesday projected a 1.5 billion Swiss franc ($1.6 billion) fourth-quarter loss as it undertakes a massive strategic overhaul.
The embattled lender last month announced a raft of measures to address persistent underperformance in its investment bank and a series of risk and compliance failures that have saddled it with consistently high litigation costs.
“These decisive measures are expected to result in a radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital, each of which are progressing at pace,” the bank said in a market update on Wednesday.
Credit Suisse revealed that it had continued to experience net asset outflows, and said these flows were approximately 6% of assets under management at the end of the third quarter. The Zurich-based bank flagged last month that this trend continued in the first two weeks of October, after reports cast doubt over its liquidity position and credit default swaps spiked. Credit default swaps are a type of financial derivative that provide the buyer with protection against default.
“In wealth management, these outflows have reduced substantially from the elevated levels of the first two weeks of October 2022 although have not yet reversed,” Credit Suisse said Wednesday.
The group expects to record a 75 million Swiss franc loss related to the sale of its shareholding in British wealth tech platform Allfunds group, while lower deposits and reduced assets under management are expected to lead to a fall in net interest income, recurring commissions and fees, which the bank said is likely to lead to a loss for its wealth management division in the fourth quarter.
“Together with the adverse revenue impact from the previously disclosed exit from the non-core businesses and exposures, and as previously announced on October 27, 2022, Credit Suisse would expect the Investment Bank and the Group to report a substantial loss before taxes in the fourth quarter 2022, of up to CHF ~1.5 billion for the Group,” the bank said.
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GUNS N GEAR
Eons ago, I worked at “corporate HQ” of a Fortune 500 outfit. You had complete dumb asses making decisions involving hundreds of millions of dollars while playing golf at the country club with other elites.
It was one huge circle-jerk, with reinforcing opinions and ‘yes men’ at every turn. The common denominator? Each of these turkeys came from YALE, HARVARD. PRINCETON, CORNELL, COLUMBIA, or DARTMOUTH. Simply ‘cuz the pedigree of the rulers of the company went there. Competence was very rare. PhDs in Social Work or Psychology controlling Finance Departments.
No facts nor critical thinking was permitted.
Time after time of unmitigated enormous financial disasters caused by these boneheads–their corollary “buddy group” on the Board of Directors would pressure management to promote these morons up the corporate ladder. Elites protect elites.
My task was dealing with the unions and hourly workers at dozens of factories, who, when asked for a .05/hour raise in wages, were always told: “The company has no money….”
These huge corporations deserve everything their incompetence, greed, and hubris begets them, plus 10%.