Credit Suisse expects about US$1.6 billion worth of losses in Q4
Switzerland's second-largest lender has been accused of being used by money launderers, corrupt politicians and crooks.
Credit Suisse has faced a string of scandals recently. Switzerland's second-largest lender has been accused of being used by money launderers, corrupt politicians and crooks. From a"shredding party" in Tokyo, where bankers destroyed evidence, to being convicted in June by Switzerland's Federal Criminal Court for not doing enough to prevent an alleged Bulgarian drug gang from laundering profits through the bank. Credit Suisse is the first major bank to face a criminal trial in Switzerland – sort of a test run for holding other banks to stricter rules.
Now, Credit Suisse is putting efforts into restructuring to try and put years of scandals behind it. First, the bank plans to shift its focus toward private banking for the rich; and last month, the bank announced raising US$4.18 billion from investors and plans to cut 9,000 employees by 2025. But, the road ahead is a steep one. On Wednesday, it projected a US$1.6 billion loss for Q4 because clients withdrew about US$88.3 billion from the bank during the first few weeks.
“Credit Suisse is on an important journey,” said Credit Suisse Chairman Axel Lehmann in a speech. “We will work to rebuild and refocus this proud 166-year-old Swiss institution with global reach.”
“The massive net outflows in Wealth Management, CS’s core business alongside the Swiss Bank, are deeply concerning -- even more so as they have not yet reversed,” said Andreas Venditti, banking analyst at Bank Vontobel AG in Zurich. “Credit Suisse needs to restore trust as fast as possible – but that is easier said than done.”
“Cutting cost is one thing but growing the business is another one,” said Vincent Kaufmann, CEO of Ethos. “Maybe they can do both, but it remains to be seen.”
“What is significant about this case is that Switzerland is taking legal action against a company and not just any company — Credit Suisse is one of the jewels in the Swiss crown.” said Mark Pieth, a money laundering expert at the University of Basel, on the Bulgarian cash laundering case.