Credit Suisse sails into a storm

Credit Suisse has warned investors of “further pain to come” after reporting its worst annual loss since the 2008 financial crisis, says Ben Martin in The Times. The bank’s shares dropped by almost 15% after it said that losses in the fourth quarter were CHF1.39bn (£1.24bn). The weak results are worrying as they come amid a “far-reaching restructuring” by new CEO Ulrich Körner, who took charge last August and is trying to revive the bank’s fortunes after a series of “scandals and mishaps”.

The losses weren’t the only “downright horrible” figures, says Patrick Jenkins in the Financial Times. The sense that Credit Suisse is losing the confidence of its customers will be fuelled by the news that the wealth management business has shed CHF93bn (15% of assets under management) in three months. The bank had said that outflows had stabilised after a “panicked exodus of money in October” – when unfounded rumours circulated about its stability – but the latest figures show they continued, probably into the new year. Signs of weakness in wealth management are particularly worrying as Credit Suisse has “been vocal about its plan to refocus away from investment banking and on to wealth management”.

“If those trends persist, Körner’s turnaround strategy makes less sense,” says Liam Proud on Breakingviews. The premise is that Credit Suisse will be focused on a “thriving wealth management unit” after 2023, but “the business already looks less attractive than it did a few months ago, raising the question of whether the final destination justifies the risky restructuring”. A better way to salvage some value would be to spin off the domestic Swiss business, which alone is worth about as much as the group’s total market capitalisation. Another option is a merger with a rival such as UBS. “Körner will be reluctant to change course so quickly. But until he can prove that a safe harbour is in sight, other options for plugging Credit Suisse’s leaky hull will remain alluring.“