ZURICH • Credit Suisse Group reported a fourth-quarter loss of 2.35 billion Swiss francs (S$3.3 billion) after taking a charge to settle a United States investigation into the role of its mortgage securities business in the 2008 financial crisis. The bank pledged to cut between 5,500 and 6,500 jobs this year.
The shortfall had resulted in the second consecutive annual loss for the Swiss bank. The bank put aside 2.17 billion francs to top up legal provisions, including for its US$5.3 billion (S$7.52 billion) settlement with the US Justice Department, the lender said in a statement yesterday.
The settlement was a "game-changer for us", chief executive Tidjane Thiam said in an interview with Bloomberg Television. "What it does is that it leaves us in a more comfortable position to look today at our capital planning."
Mr Thiam said cost-cutting is ahead of schedule and an improved market sentiment for banks that boosted trading in the fourth quarter has continued this year.
While the bank is still working on an initial public offering of its Swiss unit in the second half of this year to bolster its capital, it is considering other options and has some time to make a decision.
While the settlement resolved a major source of legal uncertainty for the bank, it put a dent in its capital buffers. Credit Suisse reported a look-through common equity Tier 1 ratio, a measure of financial strength, of 11.6 per cent at the end of December, down from 12 per cent at the end of September. Credit Suisse is targeting 13 per cent by the end of next year. "Overall, Credit Suisse presented a set of figures in line with expectations," said Mr Andreas Brun, an analyst with Mirabaud Securities.
The stock was trading 2.4 per cent higher at 9.06am local time in Zurich, while the Bloomberg Europe 500 Banks and Financial Services Index was little changed. Credit Suisse is proposing an unchanged dividend of 70 centimes a share, with an option to receive stock instead.
Like other big European lenders, Credit Suisse is reining in spending under pressure from low interest rates and rules requiring banks to hold more reserves.
Mr Thiam stepped up cost cuts in December for the second time since he presented his strategy in late 2015. Investment bankers in New York and London bore the brunt of some 7,250 jobs eliminated last year.
BLOOMBERG
