Credit Suisse losses are eating away at capital buffers

Credit Suisse Group AG

CS -5.59%

made several changes to its management team on Wednesday, reporting a quarterly loss due to weak business conditions and higher litigation costs.

The bank’s net loss for the first quarter was about $ 284 million after a loss of $ 2.2 billion in the last three months of 2021. Its equity ratio fell to 13.8% from 14.4% at the end of December. Unless the bank returns to profitability, the decline in its capital can weigh on its ability to repurchase and pay dividends.

Switzerland’s second-largest bank in terms of assets had indicated that it would make a loss, mainly due to legal costs, which came to around $ 730 million for the quarter. These highlight a continued and costly cleanup of the bank as it seeks to recover from scandals and settle client cases.

The results for the same quarter a year earlier were burdened with $ 5 billion in losses from resigning stock positions in the family office Archegos Capital Management. Its net loss was around $ 262 million in the first quarter of 2021.

In the first quarter of 2022, net sales fell 42% to about $ 4.58 billion and spending increased by 26%, the bank said. The decline came from reducing the size of its investment bank last year after Archegos and from the effects of Russia’s invasion of Ukraine in February. Revenue in the company’s asset management business also fell across regions, Credit Suisse CS -5.59%


Credit Suisse’s CEO Thomas Gottstein said the Russia action accounted for about $ 154 million that came from its revenue, causing a $ 60 million fee for credit losses. The remaining net credit exposure to Russia is about $ 387 million, the bank said.

The staff changes unveiled on Wednesday include the appointment of Francesca McDonagh, CEO of Bank of Ireland Group PLC, to become head of Europe, the Middle East and Africa by 1 October. The job is temporarily filled by the bank’s asset management manager. Credit Suisse’s head of Asia, Helman Sitohang, is leaving on June 1 and will be replaced by a banking veteran, Edwin Low.

Chief Financial Officer David Mathers leaves when a replacement is found, and Advocate General Romeo Cerutti resigns and is succeeded by Markus Diethelm, former Advocate General of rival UBS Group AG

said Credit Suisse.

Credit Suisse reorganized its divisions into a simpler structure, adding to internal controls and oversight following the Archegos loss. It hired top executives from other banks and recruited new board members, but still has not convinced investors that it is getting better. The bank’s share has fallen about 27% this year, more than its competitors.

On Friday, shareholders will have to vote on whether the bank should conduct a special audit of its handling of a key financing partner, Greensill Capital, and in the recent “Swiss Leaks” of bank data. Greensill went bankrupt in March 2021, putting billions of dollars at risk in investing in funds at Credit Suisse’s asset management department. Norges Bank Investment Management, the state wealth fund run by the Norwegian central bank, said on Sunday that it supports a Swiss fund’s proposal for an audit.

Credit Suisse has said that an audit is not necessary and could harm its prospects for recovering fund investments. Instead, it released some limited details this month about its decisions about Greensill. It said it fired 10 people, including the head of its asset management department, and that they were recalling $ 43 million in salaries.

Write to Margot Patrick at

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