Credit Suisse recorded a net loss of 252 million Swiss francs ($ 275 million) in the first quarter of 2021, but pressure on the loss is still increasing.
|Credit Suisse estimates that it will continue to lose 600 million Swiss francs in the second quarter of 2021.|
Financial and banking group Credit Suisse said the first quarter of 2021 net loss was caused by “large fees related to the US investment management fund, which dragged down its operations in asset management and investment banking. “.
In early April, the group warned of large losses following the collapse of the US investment management fund Archegos. The fee that Credit Suisse incurs due to “explosion” Archegos amounted to $ 4.4 billion. This fee is cited by Credit Suisse as the main reason affecting Q1 / 2021 business results.
After the Archegos scandal, Managing director Investment banking division at Credit Suisse, mr Brian Chin and Chief Risk and Legal Officer, Lara Warner, has resigned. Credit Suisse Board of Directors then decided to cancel the 2020 bonus plan, and at the same time cut the dividend.
Credit Suisse said today, April 22, if it weren’t for the Archegos case, Adjusted net sales in the first quarter of 2021 should have risen by 35% year-on-year and hit Swiss francs 7.4 billion, excluding important items.
And Mr. Thomas Gottstein, CEO of Credit Suisse Group, said that without the “explosion” of Archegos, this group could have recorded one of the best quarters in its history.
“The loss we incur at Archegos is unacceptable and we must take action to change the way we manage it. We are minimizing the involvement of this business, while also taking into account the risks. control the system ”, added Mr. Gottstein.
Previously, Credit Suisse adjusted asset management and bonus deferred in March after the collapse of Greensill Capital – a supply chain finance firm in the UK.
CEO Gottstein said he did not resign after the two scandals of Archegos and Greensill, CEO Gottstein said in an interview on CNBC. “Now is the time to take action, correct mistakes and take the company to the next level. It is time to come up with a solution. We had a very difficult first quarter involving two failures (Archegos and Greensill).” But the first quarter also shows that our strategy is right and we are on the right track, “he said Gottstein commented.
On the issue of risk, CEO Gottstein asserted: “We do not have the problem of cultural risk”.
Credit Suisse said the group got rid of 97% of transactions related to Archegos, but is expected to continue to lose 600 million Swiss francs in the second quarter of 2021.
The Swiss financial market watchdog has just announced that the agency has begun to initiate proceedings against Credit Suisse due to losses related to Archegos. In addition, the agency has also commenced proceedings against Credit Suisse regarding Greensill’s collapse last month.
According to the Swiss Financial Market Supervision Agency, the agency will require many other risk mitigation measures for Credit Suisse, in addition to additional measures that this bank takes.
In the first quarter of 2021, vCredit Suisse’s Tier 1 (CET1) – a measure of solvency – of Credit Suisse decreased to 12.2%, compared to 12.9% recorded at the end of 2020. Meanwhile, net revenue increased to 7, 6 billion Swiss francs, compared with 5.2 billion Swiss francs in the previous quarter. The total operating costs fell from Swiss francs 5.2 billion in the previous quarter to Swiss francs 3.9 billion.
Credit Suisse’s investment banking division recorded 1Q2021 net revenue increasing 80% year-on-year to US $ 3.9 billion. And the Asset Management Division also posted an increase in net sales compared to the same period last year, to $ 3.9 billion Swiss francs.