Investment bank Credit Suisse warns of a slowdown in trading

Credit Suisse has warned that its investment bank will report a loss for the fourth quarter as trading revenues slowed, marking the final blow to the Swiss lender, who is shying away from leaving Antonio Orta-Osorio this month.

The last quarter of 2021 saw a slowdown in investment bank earnings, partly reflecting a “return to more normal trading conditions”, Credit Suisse said on Tuesday.

Along with the downturn, the bank also said it would take out SFR 500 million ($ 545 million) in provisions in the fourth quarter to cover litigation, mostly related to its investment banking business.

The warning curtailed a grim 12 months for Switzerland’s second-largest bank, interrupted by the $ 10 billion closure of Greensill Capital, a record trade loss following the collapse of Archegos Capital’s family office and the departure of President Horta-Osório for breaches of the law. quarantine for coronavirus.

Shares of Credit Suisse fell more than 10 percent after Orta-Osorio’s resignation last week and fell nearly 40 percent since March.

The record loss in trading resulting from the collapse of Archegos has led the bank to abandon first-class brokerage and reduce the amount of risk it takes. Credit Suisse said the reset of the strategy had hit the investment bank’s profits during the quarter.

“Despite removing the uncertainty of staff and customers with the new group strategy in November, it is clear that the short-term momentum remains very weak and ambitions to expand the top line still seem a long way off,” said Andrew Coombs, an analyst at Citigroup. “We expect these results to call into question the leadership’s leadership again.”

Credit Suisse did not provide details of the lawsuit behind the provision, but it is not related to the non-existent Greensill supply chain funding funds, where a series of lawsuits involving investors and SoftBank are expected to take years to resolve.

The impact of the provision will be partially offset by SFR 225 million in profits from real estate sales, the bank added.

His struggles in the last quarter were not limited to the investment bank. Credit Suisse’s wealth management division, which is vying to catch up with Swiss rival UBS, has experienced a “significant slowdown in transaction activity” in the Asia-Pacific region, it said.

“We expect this result to be much worse than the competition and calls into question the new strategy, which is to allocate more capital to wealth management and develop this business,” Coombs said.

The bank previously announced that it would take on the impairment of a reputation of 1.6 billion francs in the quarter. Previously, the bank was generally expected to be profitable for the period.

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