Credit Suisse Group AG expects a group and investment bank loss in the second quarter, adding to the Swiss lender’s concerns after a series of profit warnings and setbacks.
Market conditions remained challenging around the world following the Ukraine invasion and monetary tightening, leading to weak customer flows and continued deleveraging among customers, the bank said in a statement on Wednesday. While advisory income at the investment bank was robust, low capital markets issuance and widening credit spreads impacted the unit’s financial performance in April and May, the bank said.
The latest profit warning adds pressure on Chief Executive Officer Thomas Gottstein, whose two-year tenure saw a $5.5 billion loss from Archegos, the collapse of partner Greensill Capital and numerous setbacks that eroded investor confidence, major ones Companies weakened and triggered an exodus of talent. The lender has said 2022 will be a year of transition as it reduces risk at the investment bank while shifting more resources to wealth management.
“Given the economic and market environment, we are accelerating our cost initiatives across the group with the aim of maximizing savings from 2023 onwards,” the bank said without giving further details. Gottstein will speak at the Goldman Sachs European Financials Conference on Thursday and will give an investor a “deep dive” on June 28 where it said it will provide an update on its cost-cutting plans.
The bad news has continued since the Archegos strike that led to the departure of investment bank chief Brian Chin and risk chief Lara Warner. The bank ousted reform-leaning chairman Antonio Horta-Osorio after he flouted Covid rules. The latest surprise indictments include legal costs of 703 million Swiss francs in the first quarter, with the bank saying there may be more legal costs. Gradually, the ranks of the board of directors inherited from Gottstein were replaced, leaving the Swiss banker as the last standing since his takeover.
Gottstein said in a recent TV interview from Davos he had a “clear mandate” to lead the bank through one of the most turbulent times in its recent history, after Bloomberg reported that members of the board of directors had held early-stage talks to replace the executive branch. CEO Axel Lehmann reiterated his support for Gottstein in a CNBC interview in Davos, telling the news organization that he fully supports the executive “because he’s good.”
https://www.independent.ie/business/world/credit-suisse-extends-losing-streak-with-expected-quarterly-loss-41731792.html Credit Suisse extends bad luck with expected quarterly loss