The woes of beleaguered Swiss lender Credit Suisse deepened today as bosses warned the bank was careering towards a loss in first quarter, after legal costs surged and the Russia-Ukraine crisis hit the bottom line.
The firm said legal provisions were set to surge by around 600 million Swiss francs ($631 million) to approximately 700 million francs in the first three months of the year.
The surge came after a court ruled that Georgia’s former prime minister and his family were due damages “substantially in excess of $500m” from Credit Suisse’s local life insurance arm over fraud.
“The Group will announce its earnings for the first quarter of 2022 on Wednesday, April 27th, and would expect to report a loss as a consequence of this increase in reserves,” the firm said today.
Exposure to the Russia-Ukraine crisis would also cost more than 200m francs, bosses said, due to a slowdown in revenue and jump in provisions for credit losses.
Meanwhile 50 million francs of losses would be lost as a result of a slump in value in its 8.6 per cent holding in Allfunds Group, as bosses warned that underlying performance at the lender had also been hit by a slowdown in capital market issuances and lower business activity.
It comes as the firm is still reeling from a spate of high profile crises in the past year, including losing billions overs its close ties to now-collapsed firms Greensill Capital and Archegos Capital in 2021.
Credit Suisse was forced to freeze $10bn of client cash last year in Greensill-backed supply-chain finance funds and has since paid back $6.7bn of the frozen funds, but the bank is yet to publish a full report into the fiasco, prompting backlash from investors.
Veteran banker Antonio Horta-Osario was called in as Chairman in an attempt to steady the ship but he was forced out of the firm after an internal investigation uncovered a number of covid breaches.
Credit Suisse’s woes deepened further last month when its dealings with sanctioned Russian oligarchs fell under the microscope of US regulators, after it was revealed bosses had asked investors to destroy documents relating to loans it had offered against yachts and private jets.
Regulators said reports from the Financial Times into the request “raises significant concerns about Credit Suisse’s compliance” with sanctions slapped on Russia by Western nations in response to the invasion of Ukraine.
Bosses have now pushed through a board shakeup in an attempt to help soothe the crises, with board veteran Christian Gellerstad nominated to takeover the vice chair role, having joined the board in 2014 and serving as vice chair and lead independent director since 2017.