A Credit Suisse logo in the window of a Credit Suisse Group AG bank branch in Zurich, Switzerland.
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LONDON – Credit Suisse reported a net loss of 252 million Swiss francs ($ 275 million) on Thursday during increasing pressure on the bank.
It says the loss reflects a “significant cost to the U.S.-based hedge fund affair in the first quarter 21 (first quarter), which offsets the positive performance in wealth management and investment banking services.”
This comes after the Swiss lender warned earlier this month of heavy losses following a scandal involving Archegos Capital, a US hedge fund, which collapsed after taking too much risk. Credit Suisse said it had hit 4.4 billion Swiss francs as a result.
In addition, investment bank CEO Brian Chin and head of risk and compliance Lara Warner have retired. The executive council has decided to waive the bonuses for the 2020 year and also cut the proposed dividend.
The scandal had a significant effect on the bank’s earnings. Credit Suisse said on Thursday that adjusted net income would have hit 7.4 billion Swiss francs, excluding significant items if it were not for the Archegos situation. This would have represented a 35% increase from a year ago.
“Our results for the first quarter of 2021 were significantly impacted by CHF 4.4 billion (Swiss francs) related to a US-based hedge fund. The loss we report this quarter is unacceptable,” said Thomas Gottstein. , CEO of Credit Suisse, said in a statement along with the results of Thursday.
In March, Credit Suisse also adjusted its asset management business and suspended bonuses following the collapse of Greensill Capital, a UK supply chain finance company.
More losses ahead
Credit Suisse said on Thursday it had left 97% of its trading positions in relation to the Archegos hedge fund scandal and expected to take an additional loss of around 600 million Swiss francs in the second quarter.
This is an evolving news release and will be updated soon.