ZURICH (AFP) – Credit Suisse warned on Tuesday that litigation would hit fourth-quarter profits while its investment bank faces a loss, in the latest blow to the scandal-plagued financial giant.
The announcement comes just a week after Credit Suisse chairman Antonio Horta-Osorio resigned for breaching Switzerland’s Covid quarantine rules.
Horta-Osorio, who had been on the job for just under nine months, had pledged to improve risk management at Credit Suisse after the bank was rocked by the implosions of financial firms Greensill and Archegos last year.
In the latest setback, the bank announced on Tuesday that its fourth-quarter profits “will be negatively impacted” as it set aside CHF500 million (USD545 million) for litigation”.
“These litigation provisions have been incurred in respect of a number of cases where the Group has more proactively pursued settlements and primarily relate to legacy litigation matters from our investment banking business,” Credit Suisse said.
The provisions will be partly offset by real estate sales of CHF225 million.
The bank, which will announce full-year and four quarter earnings on February 10, said it expects that pre-tax income broke even in the final three months of 2021.
Credit Suisse said it had seen a reduction in transaction-based revenues in its investment bank and wealth management businesses. “This reflects the usual seasonal slowdown but, in addition, business activity reflects the reversion to more normal trading conditions after the exceptional environment that prevailed for most of 2020 and 2021,” it said.
