The Swiss bank's quarterly loss will be deeper than expected, amid a slowdown with wealthy clients, more hefty legal charges, and goodwill dating back two decades.
Zurich-based Credit Suisse is adding 500 million Swiss francs ($547 million) to its legal bills in the fourth quarter, it said in a statement on Tuesday. The additional charges are likely to push Credit Suisse, which had already warned of a fourth-quarter loss, further into the red.
The crisis-roiled bank said the charge is for provisions is a number of legal cases where it «has more proactively pursued settlements and primarily relate to legacy litigation matters from our investment banking business,» without elaborating. This is partly offset by 225 million francs from selling real estate.
Slowdown in Asia
In November, Credit Suisse said it will write down 1.6 billion francs from Donaldson, Lufkin & Jenrette (DLJ), an investment bank it bought for $11.5 billion in 2000. It disclosed the move alongside a six-month strategy overhaul under recently-ousted Chairman António Horta-Osório.
In the wealth management businesses, there has been a significant slowdown in transaction activity in the International Wealth Management (IWM) and Asia Pacific (APAC) divisions, with the latter also reflecting client de-leveraging mainly due to the adverse market conditions in Asia.
As a consequence, fourth-quarter 2021 net new assets for the wealth management businesses will be modestly negative, albeit more than offset by inflows in the asset management business.
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