The Zurich-based financial institution, Credit Suisse said on Wednesday that it expects a loss of 1.6 billion dollars during the 4th quarter of the current financial year. Slowing down of customer activity with the multinational bank and losses suffered by the investment division are said to be the major reasons why the bank expects to post losses in the 4th quarter.
Credit Suisse, which is the second largest bank in Switzerland and one of the most significant financial institutions in the world has been suffering from declining share prices, a decline in customers, losses from investment, and convictions in lawsuits related to money laundering. Two major divisions of Credit Suisse, the Wealth Management Unit and Investment banking units are expected to post losses as customer outflow continues to have a deep impact on the financials. Failure of ventures such as Archegos Capital Management and Greensill Capital also put pressure on the account books of the financial institution. Credit Suisse had significant investments in both ventures.
According to the bank, net asset outflows were standing at nearly 6 percent (as of November 11, 2022) which is equivalent to 84 billion Swiss francs in outflows across wealth and asset management. High volatility in the global economy and increasing mistrust amongst investors is resulting in the outflow of customers and assets which were managed by units of Credit Suisse.
The sale of noncore businesses and various other significant monetary assets also added to the financial woes of Credit Suisse. The bank expects to suffer a loss of 75 million Swiss Francs from the sale of its shareholding in the Allfunds group.
It also expects a decrease in the number of deposits and assets managed by divisions of the banking company. A decrease in the number of assets and deposits will result in a fall in net interest income, and other incomes related to deposits and assets. The Wealth Management Division will be in a huge financial crunch during the 4th quarter if net interest income falls.
To bring the situation under control and regain profitability, Credit Suisse plans to implement large-scale restructuring in the operations of its various units and divisions. The top management of the multinational financial institution has decided to put more focus on providing private banking services. It also plans to raise 4 billion Swiss Francs to stabilize the financial records.
Apart from services and financial-related restructuring, Credit Suisse is also planning to lay off 9000 employees by 2025. Layoffs are planned as part of cost-cutting measures. There are news reports that the bank is planning to lay off more than 2500 employees in the fourth quarter.