Financial Results
Credit Suisse Expects SFr900 Million Q1 Loss; Executives Depart

The investment bank and chief risk and compliance officers of Switzerland's second-largest bank are leaving the lender after it was hit by heavy losses linked to the demise of a US-based hedge fund that is structured as a family office.
Credit Suisse
said today that it expects to report a pre-tax loss of about
SFr900 million ($959 million) in the first quarter of this year,
including a charge of about SFr4.4 billion linked to the woes of
Archegos
Capital Management.
Meanwhile, the bank said that Brian Chin, investment bank chief
executive, is stepping down at the end of April. Lara Warner,
chief risk and compliance officer, is also stepping down from her
role on the executive board - both will leave the bank. Christian
Meissner has been appointed CEO of the investment bank and a
member of the executive board, as of 1 May. Meissner has served
as Credit Suisse’s co-head of international wealth management
investment banking advisory and vice chairman of investment
banking since October 2020. Before this appointment, he held
various senior positions at leading investment banks, including
serving as head of global corporate and investment banking at
Bank of America Merrill Lynch. Prior to that, he was at Lehman
Brothers from 2004 to 2008.
The changes had been discussed in the media following disclosures
by Credit Suisse and Nomura that they had been hit
by losses sustained from exposure to Archegos.
A number of other banks are also said to have been hit, if
not as severely.
Share prices in the Zurich-listed bank rose 0.6 per cent as of 10
am local UK time today.
Joachim Oechslin has been appointed as interim chief risk officer
and executive board member on an ad-interim basis, effective
today. After having served as CRO and a member of the executive
board of Credit Suisse from January 2014 to February 2019, he
took on the role as senior advisor and chief of staff to the CEO
of the Credit Suisse Group.
Thomas Grotzer has been appointed as interim global head of
compliance; he has served as general counsel and member of the
executive board of Credit Suisse (Schweiz) since 2016. Previously
he held various leadership positions in Credit Suisse’s general
counsel function.
All three personnel will report to Thomas Gottstein, group
CEO.
Losses hit performance
The losses caused by the hedge fund – structured as a family
office – will negate the “very strong performance” that had
otherwise been achieved by the bank’s investment banking
businesses and the increase in the year-on-year profits in all
three of its wealth management businesses, as well as in asset
management, with particular strength in the Asia-Pacific
division, it said in a trading update today.
"Net new assets were positive during the quarter across the three
wealth management businesses as well as in asset management and
in the Swiss corporate and institutional business,” the bank
said.
Switzerland’s second-largest bank said it expects its
first-quarter Common Equity Tier 1 ratio – a key measure of a
lender’s financial buffer – to be at least 12 per cent in Q1. Its
Tier 1 leverage ratio will be at least 5.4 per cent. Once share
buybacks are finished in Q1, Credit Suisse said it will halt its
share buyback programme and doesn’t expect to resume it “before
we have regained our target capital ratios and restored our
dividend.”
At the end of the quarter, the group expects to have a liquidity
coverage ratio of more than 200 per cent.
Credit Suisse also referred to issues with its supply-chain
finance funds, which have been hit by problems with the Greensill
Capital business in which it had been invested. “With regard to
the four supply chain finance funds, where we continue to see
cash inflows, we will distribute a separate update on further
repayments within the next few days,” it said.
“We acknowledge that both the US hedge fund and the supply chain
finance fund matters require substantial further review and
scrutiny. The Board of Directors has launched investigations into
both of these matters which will not only focus on the direct
issues arising from each of them, but also reflect on the broader
consequences and lessons learned. We have also undertaken senior
management changes within the investment bank division and within
the risk and compliance organisation,” it said.
Gottstein said: "The significant loss in our Prime Services
business relating to the failure of a US-based hedge fund is
unacceptable. In combination with the recent issues around the
supply chain finance funds, I recognise that these cases have
caused significant concern amongst all our stakeholders. Together
with the board of directors, we are fully committed to addressing
these situations. Serious lessons will be learned. Credit Suisse
remains a formidable institution with a rich history."
The bank issues Q1 financial results on 22 April.