Behind the bank’s first-quarter losses are dwindling business units with some only running on half the steam they had a year ago.
The key businesses of investment banking and wealth management bore results that were only half as good as last year’s, producing a 51 percent and 44 percent fall in revenues respectively, and contributing to the 42 percent decline in the bank’s overall quarterly income.
While investment banking's pre-tax loss of $55 million reflects Credit Suisse’s decision to exit prime brokerage in the wake of the Archegos scandal and a lower appetite for deals during this period, it also carries some of the consequences of the bank's de-risking efforts.
Overall the bank suffered a $101 million loss from de-risking its business related to Russia, the majority of which was generated in the investment bank's global trading solutions business.
In addition to this, revenues from fixed income and equities sales and trading halved, while capital markets activity tumbled by 66 percent.
Wealth Management
Ship financing activities and Russia-related de-risking in the wealth management unit made a 25 million Swiss franc dent in the bank’s quarterly net revenues. As finews.asia reported, Credit Suisse used complex derivatives to offload the risks of billions in loans it made to oligarchs and tycoons, collateralized by their yachts and private jets, to hedge funds.
It was these loans that prompted Credit Suisse to send letters to investors and hedge funds, asking them to «destroy and permanently erase» information the bank previously provided regarding securitized loan transactions, as also reported by finews.asia.
Navigating through these legal challenges will now be the task of Markus Diethelm who is joining Credit Suisse as general counsel as of July 1, replacing Romeo Cerutti.
With additional reporting by Andrew Isbester
