Cats with a disabled bell on the hunt

After the harsh end of winter, it’s time for a spring cleaning at Credit Suisse. The number two Swiss bank had a disastrous first quarter, weighed down by 703 million new litigation reserves.

The layoffs concern the busiest people on the executive committee, those who have sat there the longest, in particular Chief Financial Officer (CFO) David Mathers. He has held the post since 2010 and will remain until the arrival of his successor, the twin-sail bank said on Wednesday.

Apparently after losing the Bermuda case and a $500 million fine, legal director Romeo Cerutti has been heavily contested to be replaced on July 1 by Markus Diethelm, who already held the same position at UBS between 2014 and 2021. The CEO is also leaving. Asia-Pacific (Apac) Helman Sitohang, who will hand over his functions on June 1 to Edwin Low, already in charge of Credit Suisse in Asia.

However, these changes did not come as a surprise, as the Sunday press reported on them over the weekend.

Overall leadership will be strengthened by the arrival of former Bank of Ireland boss Francesca McDonagh, who will take over as head of the Europe, Middle East and Africa (EMEA) region on October 1. This function was temporarily taken over from the beginning of the year by Francesco de Ferrari, general manager of the asset management division.

Surprise upside was also limited for quarterly numbers following the release of a earnings warning last week. The main ingredients are included, namely new litigation reserves of 703 million francs, losses associated with participation in Allfunds of 353 million and fees of 206 million for activities in Russia and related to the war in Ukraine.

David Mathers assured that the level of judicial appropriations should return to normal after the first quarter. Credit Suisse has increased business since March 2021, thanks in part to the Archegos and Greensill scandals.

Decreased contact with Russia

Despite these expected downsides, Credit Suisse delivered an even worse-than-expected copy punctuated by a net loss of 273 million francs, more than the 231 million loss recorded in the first quarter of 2021. set at -428 million (previously -757 million).

“The first quarter of 2022 was marked by volatility in market conditions and customer risk aversion,” explained CEO Thomas Gottstein. These unfavorable conditions are associated with the war in Ukraine and the tightening of monetary policy, especially in the United States.

All of the factors that led to a 42% drop in revenue to $4.41 billion, the decline is also driven by Credit Suisse’s strategic reorientation, which prioritizes asset management at the expense of investment banking.

Analysts are scrambling to find anything positive in this flurry of quarterly numbers. At UBS, however, we note that a net cash inflow of CHF9.7bn, including CHF4.6bn in private banking, came as a good surprise.

During the first quarter, a large bank reduced its positions in Russia. In asset management, less than 4% of assets are owned by Russian clients, some of which have been hit by Western sanctions, Gottstein said during a conference call.

The head of the group recalled that 2022 will be a “transitional year” for Credit Suisse, as the bank is very busy with its reorientation and is suffering from unfavorable market conditions.

After opening in the green, Credit Suisse shares fell early in the morning before picking up again. At 11:02 am, shares rose 0.1% to 6.61 francs, while the SMI index rose 0.41%. The registered share remains close to its all-time low of 6.18 francs, reached in March 2020 at the start of the Covid-19 pandemic.

This article has been automatically published. Source: ats/awp

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