Credit Suisse investment bank reports end of year loss

Credit Suisse’s investment arm has issued a profit warning for the fourth quarter of 2021.

The Swiss bank said it had seen a reduction in transaction-based revenues across its investment bank and wealth management businesses. It suggested the loss reflects the usual seasonal slow down as well as the “reversion to more normal trading conditions” following an unprecedented two years.

Profits for the final months of the year were also impacted by litigation costs of around CHF 500 million (£404 million). The loss was partly offset by gains on real estate sales of CHF 225 million (£182 million).

The litigation provisions were related to a number of cases where the group had pursued settlements and were largely attached to its investment banking business.

“Combined with the reduction in our overall risk appetite, including our decision to substantially exit our prime services business, this has resulted in a loss for the fourth quarter 2021 in the Investment Bank division (before the goodwill impairment),” explained the bank in a statement. “In our wealth management businesses, there has been a significant slowdown in transaction activity in the International Wealth Management and Asia Pacific divisions, with the latter also reflecting client de-leveraging mainly due to the adverse market conditions in Asia.”

As a result, fourth-quarter 2021 net new assets for its wealth management businesses are expected to be “modestly negative”, but offset by inflows in the bank’s asset management business.

The announcement marks another blow to the bank, which last week saw its chairman Antonio Horta-Osorio step down after breaking Covid quarantine rules. Horta-Osorio only joined the Swiss banking giant nine months ago, following a 10-year tenure as chief executive of Lloyds Banking Group.

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