04.06.2021

Credit Suisse To Take CHF 4.4bn Charge

While our financial results are still subject to detailed finalization and review, we would expect to report a pre-tax loss for 1Q 2021 of approximately CHF 900 million. This includes a charge of CHF 4.4 billion (I$4.7bn) in respect of the failure by a US-based hedge fund to meet its margin commitments as we announced on March 29, 2021. This will negate the very strong performance that had otherwise been achieved by our investment banking businesses and the increase in the year-on-year profits in all three of our wealth management businesses, as well as in asset management, with particular strength in our Asia Pacific division. Net new assets were positive during the quarter across our three wealth management businesses as well as in asset management and in the Swiss corporate and institutional business.

In terms of our capital position, while this is also still subject to our usual end-period finalization and review processes, we would currently expect the 1Q 2021 CET1 ratio to be at least 12%. With regard to leverage, we expect our 1Q 2021 Tier 1 leverage ratio to be at least 5.4% and our 1Q 2021 CET1 leverage ratio to be at least 3.7%. Following the completion of share buybacks in 1Q 2021, we have suspended the share buyback program and we do not intend to resume share purchases before we have regained our target capital ratios and restored our dividend. As of the end of 1Q21, our liquidity position remains strong with HQLA balances expected to exceed USD 200 billion and the Group liquidity coverage ratio (LCR) expected to exceed 200%.

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.

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 organization as separately announced today.

Thomas Gottstein, CEO of Credit Suisse Group 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 recognize 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.”

Our 1Q 2021 financial results will be published on April 22, 2021.

Changes in the Executive Board of Credit Suisse (Schweiz) AG

*Ad-hoc relevant for Credit Suisse (Schweiz) AG

Credit Suisse Group AG announced that Thomas Grotzer, who previously served as General Counsel and Member of the Executive Board of Credit Suisse (Schweiz) AG, has been appointed interim Global Head of Compliance for the Group, effective immediately. As a result, he will step down from his role as General Counsel of Credit Suisse (Schweiz) AG and also from its Executive Board. His successor will be announced in due course.

Source: Credit Suisse

Related articles

  1. The conversion includes four Dimensional Fund Advisors US tax-managed mutual funds with $29bn in assets.

  2. From The Markets

    JPMorgan Acquires Nutmeg

    Nutmeg will form the bedrock of the bank’s retail digital wealth management offering internationally.

  3. Rate at which different industries are capitalizing on the new world of open source-first differs.

  4. Joanna Munro, currently Global CIO, will lead the new combined unit.

  5. De Volksbank is the first Dutch bank to join Eurex’s ISA Direct model.