Credit Suisse appoints new CEO amid reporting a US$1.6 billion loss

Credit Suisse has been in the middle of some pretty big scandals. Between being fined after authorities accused it of helping clients dodge taxes and being handed money laundering penalties, the bank’s name has been associated with some major disgraces. This includes money laundering linked to 1MBD to repackaging risky loans in the Greensill scandal to the Archegos hedge fund collapse. In fact, The Guardian has made a timeline documenting some of the bank’s biggest scandals over the past several decades.

Now, the company has posted its third straight quarterly loss of about US$1.6 billion in the three months through June, fueled by litigation expenses, a slowdown in its investment and trading business and “geopolitical, macroeconomic and market headwinds.” With that, it also announced that asset management head Ulrich Koerner will be appointed its new CEO to oversee “a comprehensive strategic review.” Moving forward, the new big wig has to try and inject some morale into the company culture after an exodus of staff following the scandals. It’s also up to Koerner to reassure clients and investors and essentially steer the ship back to a path of stability and profitability.

Key comments:

“It has been an absolute privilege and honor to serve Credit Suisse over these past 23 years,” said Thomas Gottstein, outgoing CEO of Credit Suisse. “Credit Suisse has formidable client franchises in all four divisions globally and an immense talent pool across more than 50,000 colleagues worldwide. Despite the challenges of the past two years, I am immensely proud of our achievements since joining the Executive Board seven years ago and more recently in strengthening the bank, recruiting a top-caliber Executive Board, reducing risk and fundamentally improving our risk culture. In recent weeks, for personal and health-related considerations, and after discussions with Axel and my family, I concluded that now would be the right time to step aside and clear the way for new leadership to fully embrace the important initiatives announced this morning, which I wholeheartedly support.”

Ulrich Körner, the new CEO of Credit Suisse, said: “I thank the Board of Directors for the trust they have placed in me as we embark on this fundamental transformation. I am looking forward to working with all colleagues across the bank and the Executive Board and devoting my full energy to execute on our transformation. This is a challenging undertaking but at the same time represents a great opportunity to position the bank for a successful future and realize its full potential. I would also like to thank Thomas wholeheartedly for his support and partnership.”

“There’s still a lack of evidence in these results that Credit Suisse has turned the corner, even if there does appear to be long-term value. It’s hard to find any positives in these results,” wrote Citigroup analysts led by Andrew Coombs in a note to investors.

Axel P. Lehmann, Chairman of Credit Suisse, said: “With this deep strategic review we are setting clear priorities for the future of the firm. We want to create lasting values by serving our clients with care, dedication and entrepreneurial spirit. As we move ahead with our strategic review, our transformation and cultural change will restore Credit Suisse to its premium position as the bank for entrepreneurs in global finance.”

“Our results for the second quarter of 2022 are disappointing, especially in the Investment Bank, and were also impacted by higher litigation provisions and other adjusting items. The bank’s performance was significantly affected by a number of external factors, including geopolitical, macroeconomic and market headwinds.,” wrote Gottstein in the earnings report.