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Monday, August 15, 2022

Credit Suisse chief resigns as bank posts second quarter loss

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Credit Suisse has said its chief executive Thomas Gottstein is resigning after two and a half years in the job, as he announced “disappointing” results, plunging revenues and a net loss in the second quarter.

These are the latest signs that the top-drawer Swiss bank is not yet finished with a string of troubles in recent years.

The Zurich-based bank said Ulrich Koerner, whom Mr Gottstein brought onto its board from rival UBS last year, will take the helm starting on Monday.

Credit Suisse also announced a new “strategic review” that among other things will aim to lower costs.

Mr Gottstein, a 23-year veteran of the bank, cited “personal and health-related considerations” weighing on his move to hand over to Mr Koerner, who also worked for Credit Suisse earlier in his career.

Overall, Credit Suisse reported a net loss of 1.6 billion Swiss francs (about €1.64 billion) in the second quarter, from a profit of 253 million francs in the quarter a year ago. Revenues plunged 29 per cent to 3.6 billion francs.

Credit Suisse said: “The combination of the geopolitical situation following Russia’s invasion of Ukraine and significant monetary tightening by major central banks in response to inflation concerns have continued to result in heightened volatility and client risk aversion so far this year.”

It also said that the current market environment “has had an adverse impact on client activity across both wealth management and the investment bank”.

Those represent two of the bank’s most important operations.

Credit Suisse said widening credit spreads had caused a nearly quarter-billion-dollar loss in its leveraged finance portfolio. It also cited provisions for legal costs.

“Our results for the second quarter of 2022 are disappointing, especially in the investment bank, and were also impacted by higher litigation provisions and other adjusting items,” Mr Gottstein said.

Credit Suisse has run into a series of troubles in recent years, including bad bets on hedge funds and a spying scandal involving UBS.

Also, a Swiss court fined the bank more than $2 million (€2 million) last month for failing to prevent money laundering linked to a Bulgarian criminal gang more than 15 years ago.

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