Shares of Credit Suisse (CS) are down 14% after the Swiss bank reported a quarterly loss that
was much worse than analysts had expected and announced a strategic overhaul of its
business.
The troubled lender posted a third-quarter net loss of 4.034 billion Swiss francs ($4.09 billion
U.S.), compared to Wall Street expectations for a loss of 567.93 million Swiss francs. A year
ago, Credit Suisse reported a 434 million Swiss franc profit.
The bank noted that the Q3 loss reflected a 3.655 billion Swiss franc impairment charge related
to a “comprehensive strategic review” it undertook during the quarter ended September 30.
In releasing its third-quarter results, Credit Suisse also announced a major overhaul of its
business to address underperformance of its investment banking unit.
Specifically, the bank promised to “radically restructure” its investment bank to significantly cut
its exposure to risky assets. Credit Suisse also aims to cut its costs 15% by 2025.
The changes will see Credit Suisse spin-off its investment bank into an independent business
called “CS First Boston” and raise 4 billion Swiss francs in capital through the issuance of new
shares.
Credit Suisse has struggled this year with weak investment banking revenue, losses from the
withdrawal of its business in Russia, and litigation costs related to legacy compliance and risk
management failures, notably the Archegos hedge fund implosion.
Prior to today, Credit Suisse’s stock had been down 52% this year and trading at $4.79 U.S. per
share.
