Credit Suisse swaps out CEO, launches strategy review amid big Q2 loss
ZURICH (Reuters) -Credit Suisse Group AG named asset management head Ulrich Koerner as its new chief executive on Wednesday and said it plans cost cuts as part of a strategic review, in the bank`s latest efforts to recover from a series of scandals and losses.
The announcement is the culmination of months of pressure on current Chief Executive Thomas Gottstein over a tumultuous two-year tenure characterised by hammered shares and angry investors, some of whom had called for Gottstein to be replaced.
The bank has described 2022 as a "transition" year after costly scandals prompted a near-total reshuffle of management and a restructuring seeking to curtail risk-taking, particularly in its investment bank, while bulking up wealth management.
Credit Suisse, which posted a 1.59 billion Swiss franc ($1.65 billion) April-June loss - badly missing the 206 million francs consensus - has sought to dampen speculation that it could be acquired or broken up amid sector consolidation.
Chief Financial Officer David Mathers, when asked whether Credit Suisse might increase its capital after another quarterly loss, on Wednesday said the Swiss bank is well capitalised.
"I have been CFO for 12 years and my capital adequacy ratio is much lower during my tenure, which still represents one of the highest capital adequacy ratios," he said. Under uncertain circumstances, we will maintain CET1's capital adequacy ratio from 13% to 14% in the second half of the year. The capital adequacy ratio of
CET1 is 13.5% of risk-weighted assets, achieving the short-term target of 13.5% and approaching the market expectation of 13.6%. This was above the 2024 target for the first quarter of 14% and below the CET1 ratio of 13.8%.
"The results for the second quarter of 2022 were disappointing, especially for investment banks, and were also affected by the increase in proceedings and other adjustments," Gottstein said. Kellner, Gottstein's successor to Credit Suisse's Wealth Management Division, returned to the bank after working for UBS Group AG (SIX: UBSG). He recently served as CEO advisor from 2019 to 2020. From 2014 to 2019, he led UBS Asset Management. Previously, Koerner was also a senior executive at Credit Suisse Financial Services, leading the Swiss business.
In June, management said Credit Suisse's focus on risk recovery and technology enhancement could "soften" some of the key growth initiatives in wealth management.
Kellner, who worked at McKinsey, is considered a Swiss restructuring expert.
Banks are currently planning to reduce their cost base from CHF 16.8 billion annually this year to less than CHF 15.5 billion in the medium term, based on figures for the first half of the year. For more information, see Q3 results.
In the past, he said he was aiming to drive cost savings and accelerate the measures implemented as part of the November restructuring. Approximately 800 million francs, of which 200 million francs will be 200 million francs in 2022 and 2023, respectively.
Mothers said the savings will affect the entire group, not just the IT business. He didn't give details about possible headcount reductions. As part of the investment banking overhaul, Credit Suisse has appointed David Miller and Michael Evert as co-heads of the unit, with current head Christian Meissner focusing on strategic reviews.
Credit Suisse said, "It will take time to solve the problem and regain the trust of all stakeholders in the next few years," Vontobel analyst Andreas Benditti wrote in a note to his clients and invested. He added that the banking review was the right focus for Kellner.
Reuters quoted two people who knew the issue in May, reporting that Credit Suisse was in the early stages of assessing options to increase capital after a series of losses eroded the financial cushion. Did.
Cash injections help banks recover from billions of losses and a series of costly legal issues in 2021. While selling shares to some of the major existing investors is a good option, Credit Suisse does not exclude the use of all shareholders.
It is possible to sell a company like Credit Suisse's Wealth Management Division, but the bank has not decided what to do. On Wednesday , the bank reiterated its commitment to wealth management, but said it was evaluating strategic options in the securitized commodities business to attract leverage.
Banks strengthen control after a reckless business approach causes billions of losses from risk management and compliance failures.
Twin Hits, a $ 5.5 billion loss due to the default of US family office Archegos Capital Management, and a $ 10 billion supply chain finance fund closure associated with the collapsed British financial firm Greensill, was banked in March 2021. Had harassed me.
Credit Suisse was convicted last month in the first criminal case against one of Switzerland's largest banks for failing to prevent money laundering by a Bulgarian cocaine trafficking gang. The verdict will be appealed.