Credit Suisse reports a loss of SFr2.35 billion

CREDIT Suisse Group posted a fourth-quarter loss of 2.35 billion francs (R31.22bn) after taking a charge to settle a US investigation into the role of its mortgage securities business in the 2008 financial crisis. The bank pledged to cut between 5 500 and 6 500 jobs this year.

The shortfall, resulting in the second consecutive annual loss for the Swiss bank, was bigger than the 2.07bn franc loss predicted on average by seven analysts surveyed. The bank put aside 2.17bn francs to top up legal provisions, including for its $5.3bn (R70.7bn) settlement with the US Justice Department, the Zurich-based lender said yesterday.

The settlement was a “game-changer for us”, chief executive Tidjane Thiam said. “What it does is that it leaves us in a more comfortable position to look today at our capital planning.” Improved sentiment Thiam said cost-cutting is ahead of schedule and an improved market sentiment for banks that boosted trading in the fourth quarter has continued this year. While the bank is still working on an initial public offering of its Swiss unit in the second half of this year to bolster its capital, it is considering other options and has some time to make a decision. “It’s a very good option, it’s on the table, we’re working on it,” he said. “But of course, as you would expect, it’s what we’re paid for. We look at other options as well, continuously.”

While the settlement resolved a major source of legal uncertainty for the bank, it put a dent in its capital buffers. Credit Suisse reported a lookthrough common equity Tier 1 ratio, a measure of financial strength, of 11.6 percent at the end of December, down from 12 percent at the end of September. Credit Suisse is targeting 13 percent by the end of 2018.

“Overall, Credit Suisse presented a set of figures in line with expectations,” said Andreas Brun, an analyst with Mirabaud Securities in Zurich.