Credit score Suisse has warned that its funding financial institution will report a loss for the fourth quarter as buying and selling revenues slowed, marking the most recent blow to the Swiss lender reeling from the exit of António Horta-Osório this month.
The ultimate quarter of 2021 noticed a slowdown in revenues at its funding financial institution that partly mirrored “a reversion to extra regular buying and selling circumstances”, Credit score Suisse mentioned on Tuesday.
Alongside the decline, the financial institution additionally mentioned it will take a SFr500m ($545m) provision within the fourth quarter to cowl litigation settlements, principally tied to its funding banking enterprise.
The warning capped a grim 12 months for Switzerland’s second-biggest financial institution, which was punctuated by the closure of $10bn of funds linked to Greensill Capital, a report buying and selling loss following the collapse of household workplace Archegos Capital and the departure of chair Horta-Osório over coronavirus quarantine breaches.
Credit score Suisse shares have fallen greater than 10 per cent since Horta-Osório’s resignation final week, and are down virtually 40 per cent since March. The shares had been 1 per cent decrease on Tuesday.
The report buying and selling loss stemming from the collapse of Archegos prompted the financial institution to exit prime broking and reduce the quantity of threat it was taking. Credit score Suisse mentioned that the technique reset hit income on the funding financial institution within the quarter.
“Regardless of eradicating employees and buyer uncertainty with the brand new group technique in November, it’s clear that near-term momentum stays very poor, and ambitions to develop the top-line nonetheless appear a distant prospect,” mentioned Andrew Coombs, an analyst at Citigroup. “We anticipate these outcomes will once more deliver into query administration management.”
Credit score Suisse didn’t present particulars of the litigation behind the supply, however they don’t relate to the defunct Greensill provide chain finance funds, the place a spate of lawsuits involving traders and SoftBank is predicted to take years to resolve.
The hit from the supply shall be partly offset by features of SFr225m from actual property gross sales, the financial institution added.
Its struggles within the last quarter weren’t confined to its funding financial institution. Credit score Suisse’s wealth administration division, which is racing to catch up with Swiss rival UBS, skilled a “important slowdown in transaction exercise” within the Asia-Pacific area, it mentioned.
“We anticipate this outcome shall be far worse than friends and it calls into query the brand new technique which is to allocate extra capital to wealth administration and develop this enterprise,” Coombs mentioned.
The financial institution had beforehand introduced it will take a SFr1.6bn goodwill impairment within the quarter. Earlier than that, the financial institution as an entire was anticipated to interrupt even for the interval.
