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Credit Suisse has reported worse-than-expected second-quarter 2022 results, dragged down by poor performance of its investment banking franchise.
The latest results highlight “the urgency for decisive action…and a comprehensive review” in order to strengthen its focus on other business divisions, including Wealth Management, Swiss Bank and Asset Management, all of which it plans to support through “a fundamental transformation of its Investment Bank”, the announcement on Wednesday (July 27) said.
The bank posted net group revenue of CHF3.65 billion ($3.80 billion), which marks a 29% decrease from its second quarter revenue in 2021, landing below the CHF4.41 billion recorded in the first quarter of the year.
Having suffered a net pre-tax loss of CHF1.17 billion in the first quarter, the bank’s 1Q22 results represented a net group revenue decrease of 42% year-on-year (YoY). Its latest results reveal a total net pre-tax loss for the first half of the year of CHF1.60 billion.
“We are assessing the strategy for the Investment Bank with the aim of achieving a capital-light, advisory-led and more focussed business that supports the growth of its wealth management and Swiss Bank franchises,” a spokesperson for Credit Suisse told FinanceAsia.
“We will provide further details on the progress of the strategic review, including specific performance targets, with 3Q22 results,” the contact added, in response to whether the shift would be permanent.
The bank’s APAC franchise contributes to approximately 19% of group revenue, the spokesperson said. She added, “Over the second quarter we have successfully built on our proven track record in APAC with the broadest presence in equity capital markets of all major peers – and we’ve seen positive net asset inflows in both of the last two reporting quarters.”
Recent years have seen other banks overhaul their core strategies; almost a decade ago, UBS unveiled similar plans to scale back its investment banking business to focus on private banking, while Citi is in the process of divesting parts of its consumer banking franchise.
Alongside the publication of its latest results, Credit Suisse announced the replacement of global CEO Thomas Gottstein with Ulrich Körner, effective August 1.
Körner takes on the role as the bank continues to navigate severe reputational damage. In 2020, Credit Suisse and a former employee were found guilty of failing to prevent money laundering by a cocaine trafficking gang in Bulgaria between 2004 and 2008. It was also embroiled in the 2021 Archegos and Greensill scandals, and most recently fined $475 million for its role in the Mozambique ‘tuna bonds’ corruption scheme.
Körner was previously CEO of Credit Suisse Asset Management (CSAM), a position he assumed after rejoining the bank from UBS in 2021. He earlier worked at Credit Suisse between 1998 and 2009. The bank’s spokesperson confirmed with FA that Körner will continue to lead CSAM until a replacement is found.
The bank continues to strengthen its risk and compliance functions and leadership, as laid as out in its June Investor Deep Dive, and will further invest in technology initiatives such as cyber security, the spokesperson added.
Gottstein’s departure follows the resignation of chair, António Horta-Osório, in January 2022, who was found to have breached Covid-19 quarantine rules in Switzerland and the UK.
In April, global CFO, David Mather, also stepped down to pursue opportunities outside of the business. At the time, the bank announced the additional appointments of Edwin Low as CEO for APAC, Francesca McDonagh as CEO for EMEA, and Markus Diethelm as general counsel.
