Key Takeaways:
- Credit Suisse posted a loss of more than $4 billion in Q3 2022.
- The bank announced a slew of changes as part of its overhaul plan.
PATNA (CoinChapter.com) — Credit Suisse, the embattled Swiss bank, shared its third-quarter data that showed the lender posted losses massively larger than analysts’ estimates.
The Swiss bank recorded a Q3 net loss of $4.09 billion (4.034 billion Swiss francs), making the analysts’ predictions of $574.7 million in losses seem a tad modest. Moreover, Q3 2022 losses also dwarf the gains of Q3 2021 profit of $439.1 million.
The bank acknowledged that the global macroeconomic situation, monetary tightening by central banks, and ongoing geopolitical tensions in Europe had impacted its performance. In addition, the report stated that the investment bank’s performance was muted due to increased volatility and wider credit spreads.
Meanwhile, Credit Suisse noted that the loss reflected a $3.7 billion (3.655 billion Swiss francs) impairment on deferred tax assets. The reassessment was a result of “the comprehensive strategic review.”
Switzerland’s second-largest bank also recorded a group net asset outflow of $13.05 billion (12.9 billion Swiss francs) in the quarter. The firm suffered from a storm of negative headlines surrounding the bank’s restructuring efforts.
Credit Suisse’s Q3 numbers bring the firm’s total losses to $5.9 billion in the first nine months of 2022.
Credit Suisse To undergo Major Overhaul
Meanwhile, the bank announced a major overhaul of its business operation to address the underperformance of its investment bank.
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Furthermore, a growing number of litigations following a boat full of legacy compliance and risk management failures have also pushed investors to put pressure on the bank for an overhaul.
Credit Suisse has decided to “radically restructure” and strengthen capital to cut its exposure to risk-weighted assets. Additionally, the bank plans to reduce its cost base by 15%, or $2.53 billion (2.5 billion Swiss francs), by 2025.
Our recent Group level performance has been disappointing for our stakeholders. From today, we are taking a series of decisive actions to re-focus Credit Suisse around the needs of our clients and stakeholders. Our new, integrated model will be focused on Wealth Management, the Swiss Bank, as well as Asset Management
Ulrich Körner, CEO of Credit Suisse Group AG, said in the quarterly results report
Swiss Bank expects the restructuring to cost $2.93 billion (2.9 billion Swiss francs) by the end of 2024.
The restructuring would see Credit Suisse split its investment bank into a separate business, CS First Boston, and raise $4.05 billion (4 billion Swiss francs) through issuing new shares and a rights offering.
In addition, the Swiss bank would create a capital release unit to shutter lower-return, non-strategic businesses.
At writing, CSGN stock prices were at 4.43 CHF, down 6.82% on the day, likely reacting to the Credit Suisse news.
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