Salem Radio Network News Thursday, July 7, 2022


Credit Suisse flags breakeven for Q4 after racking up hits

ZURICH (Reuters) -Credit Suisse on Tuesday flagged roughly 500 million Swiss francs ($546 million) in litigation provisions, which it said in combination with a goodwill hit was expected to practically wipe out its fourth-quarter pre-tax profit.

“Credit Suisse Group…today announced that the reported profits for the fourth quarter 2021 will be negatively impacted by litigation provisions of approximately CHF 500 million, partly offset by gains on real estate sales of CHF 225 million,” the embattled lender said in a statement, adding the legal hits primarily related to settlement of legacy cases from its investment banking business.

Combined with other charges, it said this was expected to result in a reported pre-tax income or loss of “approximately breakeven” for the fourth quarter.

Credit Suisse has been trying to turn the page on a slew of negative headlines and reform its risk management culture, an effort set back by the abrupt departure of the chairman brought in just nine months earlier to lead that transformation.

Switzerland’s second-largest lender in November announced plans to rein in its investment bankers and plough money into looking after the fortunes of the world’s rich as it tries to curb a freewheeling culture that has cost it billions in a string of scandals.

It said at the time it expected to take a 1.6 billion franc impairment in the fourth quarter on remaining investment banking-related goodwill on its books.

On Tuesday, it said its investment bank would also be impacted by a slowdown in transaction-based revenues.

“Combined with the reduction in our overall risk appetite, including our decision to substantially exit our prime services business, this has resulted in a loss for the fourth quarter 2021 in the Investment Bank division (before the goodwill impairment),” the lender said.

It said its core wealth management businesses, which it has been trying to shore up, would also be hit by a slowdown in transactions, resulting in “modestly negative” net new assets for those businesses, “albeit more than offset by inflows in our Asset Management business.”

($1 = 0.9159 Swiss francs)

(Reporting by Brenna Hughes Neghaiwi, Editing by Miranda Murray and Michael Shields)


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