Clients from Swiss global investment bank Credit Suisse pulled out a record amount of funds in the fourth quarter as the company posted a worse-than-expected net loss for the period amid declining confidence in the bank.
According to the bank, the fourth-quarter performance was affected by a “challenging economic and market environment, significant deposit and net asset outflows at the beginning of the quarter, and the execution of our strategic actions.” Credit Suisse has been battling confidence loss among clients after years of losses and scandals.
Losses and Scandals
Credit Suisse registered a net loss of 1.39 billion francs ($1.51 billion) for the fourth quarter, which is its fifth straight quarterly loss, following a 4.03 billion francs ($4.39 billion) loss in the third quarter.The massive quarterly losses resulted in the company posting a loss of 7.3 billion francs ($7.95 billion) for the entirety of 2022, compared to the loss of 1.65 billion francs ($1.8 billion) in 2021. In addition, the loss in 2022 also made it the worst year for the Swiss bank since the financial crisis of 2008–09.
While besieged with losses, Credit Suisse is also under scrutiny for a data leak involving thousands of former clients who reportedly held $100 billion with the bank.
Earlier this month, Switzerland’s Attorney General’s Office confirmed that it was investigating suspected acts of breach of trade secrets, corporate espionage, and violations of banking secrecy laws following the leak of information related to 18,000 accounts last year.
Profitability, Restructuring
Since October, Credit Suisse has been refocusing on its core wealth management business. In late 2022, the bank raised 4 billion francs ($4.36 billion) in capital. It is also planning to lay off 9,000 jobs as the firm tries to become profitable once again. Last year, the bonus pool at the bank was reduced by half.The year “2022 was a crucial year for Credit Suisse. We announced our strategic plan to create a simpler, more focused bank, built around client needs, and since October we have been executing at pace,” Korner said.
“We successfully raised CHF ~4 billion in equity capital, accelerated the delivery of our ambitious cost targets, and are making strong progress on the radical restructuring of our investment bank.” In the past year, shares of Credit Suisse have declined by around 64 percent. CHF refers to Swiss francs.
Meanwhile, Credit Suisse foresees its investment bank operation to report a loss in the first quarter of 2023. Overall, the group is expected to report “a substantial loss” before taxes in 2023. Restructuring expenses are estimated to be at approximately 1.6 billion francs ($1.74 billion) this year and around 1 billion francs ($1.09 billion) in 2024.