The logo of Swiss bank Credit Suisse is seen at its headquarters in Zurich, Switzerland March 24, 2021.
Arnd Wiegmann | Reuters
Credit Suisse on Wednesday announced that CEO Thomas Gottstein would step down as the bank reported a massive second-quarter loss, as poor investment bank performance and mounting litigation provisions hammered earnings.
The embattled Swiss bank posted a net loss of 1.593 billion Swiss francs ($1.66 billion), far below consensus expectations among analysts for a 398.16 million Swiss franc loss.
In a statement Wednesday, Gottstein said the second-quarter results were “disappointing” and that the bank’s performance was “significantly affected by a number of external factors, including geopolitical, macroeconomic and market headwinds.”
“The urgency for decisive action is clear and a comprehensive review to strengthen our pivot to the Wealth Management, Swiss Bank and Asset Management businesses, supported by a fundamental transformation of our Investment Bank, is underway,” he said.
“Today marks a leadership change for Credit Suisse. It has been an absolute privilege and honor to serve Credit Suisse over these past 23 years. It has been my passion since day one to deliver best-in-class service to our clients.”
Gottstein, who took the reins in early 2020 following the resignation of predecessor Tidjane Thiam after a spying scandal, will be replaced by Ulrich Koerner, previously CEO of the bank’s asset management division.
This comes on the back of a net loss of 273 million Swiss francs in the first quarter, as Russia-related losses and continued litigation costs arising from the Archegos hedge fund scandal dented the bank’s income.
In the second quarter of 2021, Credit Suisse’s net income reached 253 million Swiss francs, a 78% drop from the previous year, after taking a 4.4 billion franc loss following the collapse of Archegos.
Credit Suisse warned early in June that it was likely to post a loss for the quarter, citing the deteriorating geopolitical situation, aggressive monetary policy tightening from central banks and the unwinding of Covid-19 era stimulus measures.
The bank said at the time that this confluence of adverse conditions had caused “continued heightened market volatility, weak customer flows and ongoing client deleveraging, notably in the APAC region.”
Despite the challenging backdrop, Credit Suisse vowed at an Investor Deep Dive event in late June to forge ahead with its risk management and compliance overhaul, which was launched following a string of scandals and aims to reform its risk, compliance, technology and operations functions, along with the wealth management business.
Other highlights:
- Group revenue hit 3.645 billion Swiss francs, down from 5.103 billion for the same period last year.
- CET1 capital ratio, a measure of bank solvency, was 13.5%, compared to 13.7% at the same time last year.
The bank also faces a potential $600 million hit from a court case in Bermuda relating to it local life insurance arm, as legacy scandals continue to hammer its balance sheet.
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