Credit Suisse posts first net loss since 2008

Credit Suisse, Switzerland’s second largest bank, said on Thursday that it recorded a net loss of 2.42 billion francs for 2015, weighed down by “substantial charges” it said did not reflect its underlying business performance.

Credit Suisse posts first net loss since 2008
Photo: AFP

The massive loss, the first for the bank since 2008 and higher than most analysts expected, compares with a net profit of 1.87 billion francs in 2014.

Goodwill impairment of 3.8 billion francs, litigation costs of more than 1.3 billion francs and restructuring costs of 355 million francs accounted for some of the red ink.

The goodwill writedown related to an acquisition of a US investment bank Donaldson, Lufkin & Jenrette back in 2000.

 In October, after four months at the helm of Credit Suisse, chief executive Tidjane Thiam announced 5,000 job cuts at the bank as part of an overhaul aimed at putting more focus on wealth management and raising new capital

The bank recorded a loss of 5.83 billion francs for the fourth quarter, reflecting some of the changes made in its operations.

“Given the particularly challenging environment we face, we decided in the fourth quarter to accelerate the implementation of our cost savings program across the bank,” Thiam said in a statement.

“We have identified and actioned initiatives that will permanently reduce our fixed cost base, resulting in cost savings of 500 million francs per (year) on a full year run-rate basis.”

But Thiam added that market conditions in January remained challenging.

“We expect markets to remain volatile throughout the remainder of the first quarter of 2016 as macroeconomic issues persist.”

Investors reacted negatively to the Credit Suisse report, driving the bank's share price down more than ten percent in Thursday morning trading. 

At noon the stock was trading at 14.73 francs after opening at 15.34 francs.

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Probe unearths second spying case at Credit Suisse

An internal Credit Suisse probe confirmed Monday that a second executive had been spied on, following earlier revelations that the bank's former head of wealth management was tailed by private investigators.

Probe unearths second spying case at Credit Suisse
Photo: Depositphotos

But Switzerland's number two bank maintained that just one senior leader, who has since been forced out, was entirely to blame for both incidents and that rest of the top brass had not been aware of the activities. 

Releasing the investigation conducted by the Homburger law firm, Credit Suisse said that “it has been confirmed that Peter Goerke, who was a Member of the Executive Board at the time, was placed under observation by a third-party firm on behalf of Credit Suisse for a period of several days in February 2019.”

The probe was launched following media reports last week that spying at Credit Suisse ran deeper than one case.

The banking giant was shaken by the discovery last September that surveillance had been ordered on star banker and former wealth management chief Iqbal Khan.

READ: Credit Suisse boss resigns following spying scandal

Kahn was tailed after he jumped ship to competitor UBS, sparking fears he was preparing to poach employees and clients.

That revelation came after Khan confronted the private investigators tailing him, leading to a fight in the heart of Zurich. Khan pressed charges.

An initial investigation by Homburger blamed former chief operating officer Pierre-Olivier Bouee, who stepped down, but found no indication chief executive Tidjane Thiam was involved.

The probe results released Monday echoed those findings, concluding that Bouee “issued the mandate to have Peter Goerke put under observation.”

“As was the case with Iqbal Khan, this observation was carried out via an intermediary,” it said, stressing that Bouee “did not respond truthfully” during the initial investigation “when asked about any additional observations and did not disclose the observation of Peter Goerke.”

The new investigation also did not find indications that Thiam or others in the board or management “had any knowledge of the observation of Peter Goerke until media reported on it,” the statement said.

“The Board of Directors considers the observation of Peter Goerke to be unacceptable and completely inappropriate” it said, adding that it had issued an apology to Goerke.

It added that “safeguards” were already in place to avoid future similar misconduct. Switzerland's market watchdog FINMA meanwhile said last week that it was “appointing an independent auditor to investigate Credit Suisse in the context of observation activities.”

“This investigator will clarify the relevant corporate governance questions, particularly in relation to the observation activities,” a statement said Friday.