Jul 30, 2020

News | Business | Banking: Credit Suisse launches restructuring after trading profit boost

Owen Walker

Credit Suisse unveiled sweeping changes to its structure as the bank benefited from a surge in trading in the second quarter.
The revamp, which is designed to reduce costs and improve efficiencies, rolls back some of the changes brought in by previous chief executive Tidjane Thiam. It comes as his successor, Thomas Gottstein, sets about putting his mark on the business almost six months after taking on the role.
Announcing the changes, which solidified the group’s global investment banking operations and combined risk and compliance oversight, Mr Gottstein said: “These initiatives should also help to provide resilience in uncertain markets and deliver further upside when more positive economic conditions prevail.”
The group said it hoped to save SFr400m a year from the reshuffle by 2022.
The Swiss lender benefited from the resilience of its domestic market during the coronavirus pandemic. It reported pre-tax income of SFr1.6bn ($1.75bn) for the quarter, up 19 per cent on a year earlier. Its domestic wealth management business and global markets units provided the bulk of the group’s revenues, while its investment banking and capital markets division beat analyst expectations and returned to profit.
Credit Suisse booked SFr296m of provisions for bad loans in the second quarter, less than the SFr568m provisions in the first three months of the year.
Mr Gottstein said: “In a continued volatile market environment, we delivered a strong performance. Despite persistent challenges caused by Covid-19, our employees again showed outstanding commitment and dedication.”
As part of the restructuring, the group announced a new investment banking division combining its previous global markets, investment banking and capital markets, and Asia-Pacific markets business lines. The division will be led by Brian Chin, formerly head of global markets, while David Miller, who previously led IBCM, steps down from the executive board and will head the capital markets and advisory businesses within the investment bank.
Credit Suisse also combined its risk and compliance divisions, headed by former chief risk officer Lara Warner. Lydie Hudson, who had been chief compliance officer, stays on the executive board to lead a new sustainability, research and investment unit.
Mr Gottstein was named chief executive in February after his predecessor, Mr Thiam, was ousted following damaging revelations over two corporate spying operations.
Within weeks, Europe was gripped by the coronavirus pandemic, which forced Credit Suisse to book a sevenfold increase in reserves for bad loans in Mr Gottstein’s first quarterly results in April.
The Swiss lender has also been caught up in scandals at Luckin Coffee and Wirecard, having worked on deals for both, as well as holding an internal review over circular funding within its own supply chain finance funds linked to SoftBank and Greensill Capital.
The review led SoftBank to pull $500m from the Credit Suisse funds this month.
Last week, Credit Suisse’s Zurich rival UBS reported an 11 per cent drop in second-quarter profits as strong performance at its investment bank was offset by an additional $272m of loan loss provisions.

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