Credit Suisse Posts Wider Loss Than Expected in Fourth Quarter -- Update
February 14 2017 - 03:33AM
Dow Jones News
By Brian Blackstone
ZURICH-- Credit Suisse Group AG posted a wider-than-expected
loss in the fourth quarter because of a hefty settlement the Swiss
banking giant agreed to pay to resolve crisis-era mortgage
securities cases.
Zurich-based Credit Suisse said Tuesday that its net loss was
2.3 billion Swiss francs ($2.3 billion), versus expectations of a
2.04 billion franc loss, according to a consensus of analyst
estimates compiled by the bank. During the fourth quarter of 2015,
Credit Suisse posted a heftier loss of 5.8 billion francs
attributable to restructuring costs associated with its pullback
from investment banking. For 2016 as a whole, Credit Suisse posted
a loss of 2.4 billion francs.
Credit Suisse said it is targeting job cuts of 5,500 this year,
which should help reduce its expenses to under 18.5 billion francs
by the end of 2017.
Still, the bank offered an upbeat assessment for early 2017,
saying that the wealth management and investment banking units were
off to a strong start and that there was a rebound in client
trading activity.
In December, the bank reached a settlement worth roughly $5.3
billion with the U.S. Justice Department over toxic mortgage
securities sold before the financial crisis. This included a $2.5
billion penalty and consumer relief payments of $2.8 billion over
the next five years.
The fourth-quarter results included net litigation expenses of
2.2 billion francs, reflecting the settlement with U.S.
authorities. The agreement removes "a major source of uncertainty
for our future," Credit Suisse Chief Executive Tidjane Thiam said
in a statement.
Its revenue for the quarter was 5.4 billion francs, and totaled
21.6 billion francs for 2016, a 7% drop from the previous year.
Credit Suisse said it suffered 6.7 billion francs in net asset
outflows in the last three months of 2016, a result of the closure
of a joint venture and of a flurry of clients either belatedly
declaring their Swiss accounts to tax authorities or moving
undeclared funds elsewhere.
Swiss rival UBS Group AG recently reported its own heavy
outflows for the final quarter of last year. The billions of
dollars in outflows for both firms came as Switzerland geared up
for an international information exchange program designed to
expose hidden Swiss accounts to authorities in several
countries.
That program got under way at the beginning of this year. In
addition, a number of countries in regions including Latin America
have recently kicked off amnesty programs aimed at encouraging
clients with offshore accounts to disclose them.
Credit Suisse cited particularly significant outflows related to
clients in Latin America and Southeast Asia.
John Letzing contributed to this article.
Write to Brian Blackstone at brian.blackstone@wsj.com
(END) Dow Jones Newswires
February 14, 2017 03:18 ET (08:18 GMT)
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