Bank leaders believe the money invested in the country is well-managed
10 March 2022 - 16:00
by Brenna Hughes Neghaiwi
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The logo of Swiss bank Credit Suisse is seen at a branch office in Zurich on November 3 2021. Picture: REUTERS/ARND WIEGMANN
Zurich — Credit Suisse had a gross credit exposure of Sf1.569bn ($1.69bn) to Russia at end-2021, the Swiss bank said on Thursday, becoming the latest European bank to reveal the size of its potential losses in relation to sanctions imposed on the country.
Credit Suisse’s year-end exposure included lending to wealthy clients as well as trade finance and investment banking exposure — positions it said have since been reduced.
“The world around us is changing in at times alarming ways, with the ongoing effects of Covid-19 and, more recently, the tragic consequences of Russia’s invasion of Ukraine,” CEO Thomas Gottstein and chair Axel Lehmann said in the bank’s annual report.
Gottstein and Lehmann said they believe the bank’s exposure to Russia is “well-managed” and said it had the right systems in place to deal with associated risks.
Other banks, including UniCredit and BNP Paribas, have warned of billions of euros in potential costs after Western sanctions imposed on Russia over its invasion of Ukraine.
Factoring in risk mitigation via credit default swaps and other hedges, as well as guarantees, insurance and collateral, Credit Suisse said its Russian credit exposure stood at Sf848m on a net basis at end-2021. It had minimal exposure in terms of loans granted to sanctioned individuals in its wealth management division.
Credit Suisse’s 2021 was marked by the collapse of $10bn in supply chain finance funds linked to insolvent British finance firm Greensill and a $5.5bn trading loss from the implosion of the Archegos investment fund.
The Swiss bank also announced a new Sf78m litigation provision on Thursday, which increased its annual loss to Sf1.65bn from a previously reported Sf1.57bn. The new provision was to cover a settlement reached with German utility Stadtwerke Munchen in March.
Credit Suisse executives had their bonuses cut by nearly two thirds in 2021, the annual report showed, while CEO Gottstein’s compensation fell 43% to SF3.8m in his first full year in the job, dipping below pay awarded to CFO David Mathers.
“The compensation committee considered that it was important to emphasise leadership accountability. As a result, executive board members had one full year of variable compensation cancelled,” committee chair Kai S Nargolwala said in a letter.
“This equated to lost compensation for the executive board of more than Sf40m.”
Executive pay had already been cut in 2020 as the bank contended with a string of bad headlines, ranging from a spying scandal to a $450m writedown on a hedge fund investment.
Gottstein became CEO in February 2020 after the departure of his predecessor over the spying scandal. His pay was already cut to Sf6.5m in 2020, from the Sfm8.53 the bank had proposed ahead of the Archegos and Greensill scandals.
In 2021 Credit Suisse replaced more than half its executives as the scandals prompted investigations and a strategic overhaul. Of the 12 members on its executive board, five were already executive managers at the start of 2021, with five having joined the bank since 2020 and two internal promotions.
The bank has also changed chair twice since the start of 2021. Former chair Antonio Horta-Osorio — brought in to lead a turnaround — left after nine months following an internal investigation into his personal conduct. He received Sf3.5m for the period up to his departure in January, Credit Suisse said.
In an unusual step it said the board has agreed to pay his Sf1.125m chair fee “fully in cash, rather than group share”.
Credit Suisse had already flagged a 32% drop in its organisation-wide bonus pool in February, when it reported a loss for both the fourth quarter and the full year. Its overall variable compensation pool fell to Sf2bn in 2021 as the bank reduced regular deferred awards but sweetened pay for senior bankers by a surge in upfront cash and a one-off bonus.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Credit Suisse reveals credit exposure in Russia
Bank leaders believe the money invested in the country is well-managed
Zurich — Credit Suisse had a gross credit exposure of Sf1.569bn ($1.69bn) to Russia at end-2021, the Swiss bank said on Thursday, becoming the latest European bank to reveal the size of its potential losses in relation to sanctions imposed on the country.
Credit Suisse’s year-end exposure included lending to wealthy clients as well as trade finance and investment banking exposure — positions it said have since been reduced.
“The world around us is changing in at times alarming ways, with the ongoing effects of Covid-19 and, more recently, the tragic consequences of Russia’s invasion of Ukraine,” CEO Thomas Gottstein and chair Axel Lehmann said in the bank’s annual report.
Gottstein and Lehmann said they believe the bank’s exposure to Russia is “well-managed” and said it had the right systems in place to deal with associated risks.
Other banks, including UniCredit and BNP Paribas, have warned of billions of euros in potential costs after Western sanctions imposed on Russia over its invasion of Ukraine.
Factoring in risk mitigation via credit default swaps and other hedges, as well as guarantees, insurance and collateral, Credit Suisse said its Russian credit exposure stood at Sf848m on a net basis at end-2021. It had minimal exposure in terms of loans granted to sanctioned individuals in its wealth management division.
Credit Suisse’s 2021 was marked by the collapse of $10bn in supply chain finance funds linked to insolvent British finance firm Greensill and a $5.5bn trading loss from the implosion of the Archegos investment fund.
The Swiss bank also announced a new Sf78m litigation provision on Thursday, which increased its annual loss to Sf1.65bn from a previously reported Sf1.57bn. The new provision was to cover a settlement reached with German utility Stadtwerke Munchen in March.
Credit Suisse executives had their bonuses cut by nearly two thirds in 2021, the annual report showed, while CEO Gottstein’s compensation fell 43% to SF3.8m in his first full year in the job, dipping below pay awarded to CFO David Mathers.
“The compensation committee considered that it was important to emphasise leadership accountability. As a result, executive board members had one full year of variable compensation cancelled,” committee chair Kai S Nargolwala said in a letter.
“This equated to lost compensation for the executive board of more than Sf40m.”
Executive pay had already been cut in 2020 as the bank contended with a string of bad headlines, ranging from a spying scandal to a $450m writedown on a hedge fund investment.
Gottstein became CEO in February 2020 after the departure of his predecessor over the spying scandal. His pay was already cut to Sf6.5m in 2020, from the Sfm8.53 the bank had proposed ahead of the Archegos and Greensill scandals.
In 2021 Credit Suisse replaced more than half its executives as the scandals prompted investigations and a strategic overhaul. Of the 12 members on its executive board, five were already executive managers at the start of 2021, with five having joined the bank since 2020 and two internal promotions.
The bank has also changed chair twice since the start of 2021. Former chair Antonio Horta-Osorio — brought in to lead a turnaround — left after nine months following an internal investigation into his personal conduct. He received Sf3.5m for the period up to his departure in January, Credit Suisse said.
In an unusual step it said the board has agreed to pay his Sf1.125m chair fee “fully in cash, rather than group share”.
Credit Suisse had already flagged a 32% drop in its organisation-wide bonus pool in February, when it reported a loss for both the fourth quarter and the full year. Its overall variable compensation pool fell to Sf2bn in 2021 as the bank reduced regular deferred awards but sweetened pay for senior bankers by a surge in upfront cash and a one-off bonus.
Reuters
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