Credit Suisse issues profit warning amid rising legal fees
Credit Suisse has warned of losses in the fourth quarter as a result of mounting litigation costs and a slowdown in trading activity.
The Swiss bank said it expects pre-tax profit to “breakeven” for the final quarter of the year as legal fees rose by CHF 500m (£404m).
The profit warning follows a series of high-profile scandals. Most recently, Chairman Antonio Horta-Osorio resigned after breaking Covid-19 quarantine rules.
“The reported profits for the fourth quarter 2021 will be negatively impacted by litigation provisions of approximately CHF 500 million, partly offset by gains on real estate sales of CHF 225 million,” Credit Suisse announced in a statement issued today.
“These litigation provisions have been incurred in respect of a number of cases where the Group has more proactively pursued settlements and primarily relate to legacy litigation matters from our investment banking business,” it continued.
Credit Suisse also raised concerns about a slowdown in investment activity following the pandemic noting a reduction in transaction-based revenues in the company’s Investment Bank and wealth management businesses as well as a lower appetite for risk amongst investors. The bank said it has a goodwill impairment of CHF 1.6bn (£1.3bn) for the fourth quarter with the investment banking division facing a loss.
“Combined with the reduction in our overall risk appetite, including our decision to substantially exit our prime services business, this has resulted in a loss for the fourth quarter 2021 in the Investment Bank division,” Credit Suisse confirmed.
Fourth quarter results will be published in full on 10 February 2021.
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