Beleaguered lender Credit Suisse today warned investors for the third time since January to brace for losses.
The Swiss bank said another poor performance in its investment bank caused by severe market volatility will likely drag it to a second quarter loss.
Russia’s invasion of Ukraine, central banks hiking interest rates to cool inflation and cooling in government spending after the Covid-19 crisis receded has jolted financial markets.
Firms have avoided issuing shares and debt due to greater economic uncertainty caused by the Russia-Ukraine war and high inflation raising the prospect of a global recession, cutting a key source of income for investment banking giants.
A depressed issuance environment is expected to have weighed on Credit Suisse’s investment banking division, dragging down the overall group’s bottom line into the red.
The bank’s operations in the Asia-Pacific region have suffered a heavy blow, Credit Suisse said.
“Given the economic and market environment, we are accelerating our cost initiatives across the group with the aim of maximising savings from 2023 onwards,” Credit Suisse said.
“As we look forward to the second half, the year 2022 will remain one of transition for Credit Suisse,” it added.
The bank will provide details on how it plans to accelerate a cost cutting drive to boost profits at an investor day 28 June. Analysts expect that announcement to include job cuts in its investment banking arm.
The firm will release second quarter results on 27 July.
In January, Credit Suisse told investors to bake in losses in the final three months of last year.
Just three months later, it again said it expected to still be in the red in the first quarter of this year, mainly caused by it booking a hefty litigation fee to deal with the fallout from the fallout from Bill Hwang’s failed Archegos Capital fund.
The warning is the latest in a series of scandals that have engulfed the Swiss lender and tarnished its reputation among the world’s banking elite.
The firm earlier this year lost its chairman and former Lloyds boss, António Horta-Osório, after a probe found he broke Covid-19 restrictions.