Credit Suisse loss slightly smaller than expected
The hard-hit bank said it was raising capital by issuing notes convertible into 203-million shares
Zurich — Credit Suisse posted a slightly smaller-than-flagged Sf757m first-quarter pretax loss on Thursday, as a multibillion dollar hit from the collapse of US investment fund Archegos stymied a bumper trading quarter.
Stripping out the Sf4.4bn charge and other significant items, the bank said pretax profit would have been Sf3.6bn, which would have represented the bank’s best quarter operationally in at least a decade.
A net loss of Sf252m compared with a mean estimate of Sf815m in the bank’s own poll of 17 analysts.
It said it was raising capital by issuing notes convertible into 203-million shares.
“The loss we report this quarter, because of [the US-based hedge fund] matter, is unacceptable,” CEO Thomas Gottstein said in a statement. “We expect that our successful MCN placement today will further strengthen our balance sheet and enable us to support the momentum in our core franchise.”
Credit Suisse has emerged as the bank hardest-hit from exposure to Archegos, which collapsed when it could not meet margin calls.
Credit Suisse said it expects a residual impact of about Sf600m from the US-based hedge fund matter in the second quarter. It already had exited 97% of the related positions.
That, plus the demise of another client, Greensill Capital, has triggered internal and external probes and the ousting of a swathe of executives.
US rivals, some of which were quicker to exit trading positions as Archegos collapsed, produced forecast-beating profit for the first quarter. Net income at Goldman Sachs rose nearly six-fold. Morgan Stanley disclosed an almost $1bn loss from Archegos yet still reported a 150% jump in profit.
Highlighting the strong environment, Credit Suisse posted bumper earnings in its Asia-Pacific unit up 154% year on year and a 25% pretax profit rise in its Swiss business — the only two divisions unscathed by the recent episodes with Archegos and Greensill.
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