Credit Suisse: record loss – economy

The managers of the venerable Credit Suisse used to hold press conferences in Zurich to present their annual results. Afterwards, you could still discuss the numbers with the management team over appetizers. But times have changed, not only because of the pandemic. Credit Suisse boss Ulrich Körner, who has been in office for almost six months, prefers to keep his observers at a distance. Körner only presented his major conversion plan from October on the phone. Then in December became knownthat the bank is the business journalistic platform Inside parade ground sued for violating the privacy rights of its managers. And on Thursday, Körner will also present the balance sheet for 2022 via media call, the purely virtual event lasts almost 38 minutes.

In view of the disastrous figures, he might have been able to work a little harder: the bank reported a loss of CHF 7.3 billion for 2022, which is the highest minus since the 2008 financial crisis. Analysts had expected the balance sheet to be bad, after all the bank had already warned in November that the figures for the fourth quarter would tend to disappoint. But the amount of the loss is impressive, as is the outflow of money: customers withdrew CHF 123 billion last year, CHF 110 billion in the fourth quarter alone.

Huge loss of trust

In investment banking, too, income, i.e. total income, fell sharply at the end of the year. This is evidence of an enormous loss of trust that the bank has had to accept after the numerous crises of recent years. And in fact, the share price, which had already fallen sharply in recent months, temporarily lost eight percent to just under three francs on Thursday. Shortly before the financial crisis, the shares were still worth 80 francs – the decline can be grasped in numbers.

CEO Körner still tries to let as little crisis mood arise as possible. The goals of October have been reaffirmed and the bank is on track with the urgently needed cost-cutting measures. The money house will soon be less complex and less risky. Credit Suisse is expected to be profitable again by 2024. “2023 will be a turning point, and then we’ll get better and better,” said the former McKinsey consultant. He hopes the bank will be able to recover a significant chunk of investors’ outflows in 2023.

The competition is better off

Credit Suisse currently stands out negatively from the competition: almost all other major European banks benefited in 2022 from the rising key interest rates and the surprisingly good economy, some posted the highest profits in decades. Credit Suisse, on the other hand, has after numerous management errors and scandals maneuvered into an existential crisis. A single tweet from an Australian journalist in the fall was enough to exacerbate a smoldering crisis of confidence. The share price continued to fall and more and more customers withdrew their assets. A new strategy was needed to liberate the country, financed by two state-related investors from Saudi Arabia and Qatar, who again injected billions of fresh capital into the bank at the end of the year. The bank now wants to give up large parts of investment banking, reduce costs by 15 percent and cut around 9,000 of the 52,000 jobs by 2025.

The Qataris had already more or less rescued the traditional bank after major losses in the financial crisis and had remained loyal to it over the years. Together, the shareholders from the Arabian Peninsula now own more than twenty percent of Credit Suisse. Do you seriously believe that the Swiss bank will turn around or are you pursuing more political intentions with your investment? Meanwhile, that remains unclear.