Credit Suisse posted a surprise fourth-quarter net loss as business at its investment bank slumped and it took almost 1 billion Swiss francs ($1.1 billion) of charges for slashing costs and risky assets to meet tough new capital rules. "Our performance for the fourth quarter 2011 was disappointing," said Chief Executive Brady Dougan.
"It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements." Credit Suisse shares, which had risen 14 percent this year, were down 2.7 percent to 24.54 francs by 1229 GMT, underperforming the European banking sector which rose 1.2 percent.
Total revenue at Credit Suisse's loss-making investment bank shrank to half on the previous quarter as the bank eked out a meager 36 million francs from fixed income sales and trading, the focus of cutbacks of risky assets and jobs. Equities fared almost as badly, dropping more than a third on the quarter.
The bank said the charge of 981 million francs was due to the accelerated implementation of a risk reduction plan, steps to exit unprofitable businesses and expenses due to the rapid execution of cost cutting programmes. The charge pushed Credit Suisse into a quarterly net loss of 637 million francs - its first quarterly loss in three years - missing average analyst expectations for a profit of 430 million. Credit Suisse also proposed nearly halving its dividend to 0.75 Swiss francs per share, from 1.30 francs in 2010. The bank also said it was on track to cut costs by 2 billion francs by the end of next year. It said its total bonus pool would drop 41 percent to 3 billion francs, from 5 billion in 2010.
Credit Suisse finished the year with 20,900 investment bankers, 200 more than a year ago, and far more than Deutsche Bank's 15,184. At the same time, Credit Suisse lagged Deutsche in fixed income and equities league table rankings, according to data compiled by Thomson Reuters. Credit Suisse said it did not have imminent plans for further staff reductions, adding 40 percent of investment banking staff let go had been senior bankers - typically the most expensive hires.