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Credit Suisse 4th quarter loss amid restructuring
Source: Agencies |
February 10, 2012, Friday
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CREDIT Suisse Group posted its first fourth-quarter net loss since 2008, as Switzerland's second-biggest bank continued its drive to reduce its exposure to potentially-risky investment banking at a time when Europe's economy is facing problems related to a raging debt crisis.
The bank said yesterday that its net loss in the fourth quarter amounted to 637 million Swiss francs (US$698 million), way down on analysts' expectations for a more modest loss of 431 million francs.
In the equivalent period in 2010, Credit Suisse posted a 841 million francs profit.
Credit Suisse's share price took a hit despite a bigger than anticipated increase in the dividend to 0.75 franc a share. The company's share price was down 2.3 percent at 24.65 francs.
Brady W. Dougan, chief executive officer of the bank that has 50,000 staff around the world and manages more than US$1 trillion in assets, blamed the loss on tough market conditions and aggressive cuts in costs and risks, including the need to meet a new requirement that it hold more capital.
"Our performance for the fourth quarter 2011 was disappointing," Dougan said. "It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements."
Dougan said an acceleration in its restructuring program cost 981 million francs in the last quarter.
One of the most important changes stems from Credit Suisse's attempt to cut the risk profile of it investment bank division. In November, Credit Suisse had said that by the end of 2014 it would cut risk-weighted assets by 110 billion francs, mostly from the investment bank's fixed-income unit.
Its investment bank saw revenues decline 64 percent in the fourth quarter, and that pushed the unit to its second consecutive quarterly loss.
Following confirmation of its quarterly loss, David Mathers, the bank's chief financial officer, told reporters the bank in April will propose a dividend payout of 75 centimes a share for 2011, down from 1.30 francs a share for the previous year.
"The fourth-quarter results are massively below expectations, with all key figures disappointing," said analysts at Zuercher Kantonalbank. "In order to sweeten this weak result, a higher-than-expected dividend .... is being proposed."
Credit Suisse said it also is cutting its 2011 bonus pool by 41 percent to about 3 billion francs from 5 billion francs awarded in 2010, after its securities unit posted a second consecutive quarterly loss.
The bank is in the middle of a job-cutting drive that will see 3 percent of staff gone by the end of 2013. This will see 1,500 jobs lost, on top of earlier plans to cut 2,000 jobs.
The bank said yesterday that its net loss in the fourth quarter amounted to 637 million Swiss francs (US$698 million), way down on analysts' expectations for a more modest loss of 431 million francs.
In the equivalent period in 2010, Credit Suisse posted a 841 million francs profit.
Credit Suisse's share price took a hit despite a bigger than anticipated increase in the dividend to 0.75 franc a share. The company's share price was down 2.3 percent at 24.65 francs.
Brady W. Dougan, chief executive officer of the bank that has 50,000 staff around the world and manages more than US$1 trillion in assets, blamed the loss on tough market conditions and aggressive cuts in costs and risks, including the need to meet a new requirement that it hold more capital.
"Our performance for the fourth quarter 2011 was disappointing," Dougan said. "It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements."
Dougan said an acceleration in its restructuring program cost 981 million francs in the last quarter.
One of the most important changes stems from Credit Suisse's attempt to cut the risk profile of it investment bank division. In November, Credit Suisse had said that by the end of 2014 it would cut risk-weighted assets by 110 billion francs, mostly from the investment bank's fixed-income unit.
Its investment bank saw revenues decline 64 percent in the fourth quarter, and that pushed the unit to its second consecutive quarterly loss.
Following confirmation of its quarterly loss, David Mathers, the bank's chief financial officer, told reporters the bank in April will propose a dividend payout of 75 centimes a share for 2011, down from 1.30 francs a share for the previous year.
"The fourth-quarter results are massively below expectations, with all key figures disappointing," said analysts at Zuercher Kantonalbank. "In order to sweeten this weak result, a higher-than-expected dividend .... is being proposed."
Credit Suisse said it also is cutting its 2011 bonus pool by 41 percent to about 3 billion francs from 5 billion francs awarded in 2010, after its securities unit posted a second consecutive quarterly loss.
The bank is in the middle of a job-cutting drive that will see 3 percent of staff gone by the end of 2013. This will see 1,500 jobs lost, on top of earlier plans to cut 2,000 jobs.
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