Switzerland’s scandal-hit banking giant Credit Suisse said Wednesday it was appointing a new chief executive as higher litigation costs, financial market volatility and rising interest rates worldwide pushed it deeper into the red in the second quarter.
“Our results for the second quarter of 2022 are disappointing, especially in the investment bank division, and were also impacted by higher litigation provisions and other adjusting items,” outgoing chief executive Thomas Gottstein said in a statement.
“The bank’s performance was significantly affected by a number of external factors, including geopolitical, macroeconomic and market headwinds,” said Gottstein, who at the same time announced his resignation at the helm of Switzerland’s second-biggest bank.
“Today marks a leadership change for Credit Suisse,” said Gottstein, who joined the executive board in 2015 and was appointed CEO in 2020.
“It has been an absolute privilege and honour to serve Credit Suisse over these past 23 years.”
Gottstein is to be replaced by Ulrich Koerner, currently head of asset management, with effect from August 1.
Koerner previously worked at Credit Suisse in different roles between 1998 and 2009 after which he worked at rival bank UBS between 2009 and 2020.
The 60-year-old German and Swiss citizen returned to Credit Suisse in 2021.
The bank has been hit by a series of scandals and crises including the implosions of financial services firms Greensill and Archegos last year which cost Credit Suisse billions.
– ‘Challenging’ conditions –
Turning to its quarterly results, Credit Suisse said it booked net loss of 1.593 billion Swiss francs ($1.65 billion) in the period from April to June, wider than the loss of 273 million francs in the preceding three months and down from net profit of 253 million francs in the second quarter of 2021.
“As stated in our trading update on June 8, the second quarter was marked by challenging economic and market conditions,” the bank said.
“The combination of the current geopolitical situation following Russia’s invasion of Ukraine and significant monetary tightening by major central banks in response to the substantial increase in inflation have resulted in continued heightened market volatility, weak customer flows and ongoing client deleveraging,” it said.
After starting the day lower on the Swiss stock exchange, Credit Suisse shares rallied by 1.40 percent to 5.23 Swiss francs before 0900 GMT.
Since March last year, its shares have lost more than 60 percent in value.
“We knew the results were going to be bad as the bank had profit-warned. But it’s (again) worse than expected.” Jefferies analysts said in a note.
The bank’s problems “get more acute”, they warned, as it confronts “the downward momentum in revenues, lack of flexibility in costs, and (consequent) downward trend in capital ratio”.
Looking ahead, Credit Suisse said it expected the current market conditions “to continue for the coming months”.
Trading so far in the third quarter “has been marked by a continued weakness in client activity, exacerbating normal seasonal declines”, it said.