Now the sheikhs are here – and they are immediately greeted with bad news. Even ahead of Credit Suisse’s Extraordinary General Meeting, the bank issued a profit warning Wednesday morning. The bank will be in the red in the fourth quarter as well, and the quarterly loss is likely to rise to 1.5 billion. This is the fifth in a row!
The sick big bank still has a big, unresolved problem: Customers, especially the wealthy, are fleeing the bank all over the world. Since the beginning of October, the bank has lost more than 60 billion francs in client funds in asset management. In other words, the foundations of Credit Suisse are narrowing day by day. The less funds clients entrust to CS, the more difficult it will be to profit from their management in the future.
capital injection urgent
While the outflow of client funds has slowed somewhat, it has not yet been stopped. And a profit warning, little confidence-boosting as the stock’s continued price loss, the all-time low in early October isn’t far off.
The capital increase did not change that. This was approved by the shareholders, rejection would not be an alternative. Because the profit alert shows how urgently the bank is dependent on this capital injection of around four billion francs. Without this money, the implementation of the recovery plan by the CS leadership would still be wasted.
Because the liquidation of the investment bank and the reduction of 9,000 jobs worldwide – 2,000 of them in Switzerland – are only costly to begin with. Low risks and savings will only have a positive impact on the bank’s results much later.
Saudi bank’s largest shareholder
Chairman of the Board of Directors Axel Lehmann (63) expressed his gratitude after the Extraordinary General Assembly and said, “The result of the voting confirms our confidence in our strategy that we presented in October. And this is an important step in the building of the new Credit Suisse.”
So now the Saudis are on board at Credit Suisse. With the capital increase, the Saudi National Bank became one of the biggest shareholders of the troubled CS. In the future, the Saudi commercial bank will own almost ten percent of the large Swiss bank.
But despite billions of oil coming from the Gulf, things are not smooth for the bank. The bank leadership around Lehmann and CEO Ulrich Körner (60) must finally prove that they can now retain remaining customers and acquire new customers.
Return to profitability from 2025
In a difficult market environment, this alone is an ingenious task for a sick bank. More quarterly losses will follow. The time for cheap promises is over, the bank must act now if it wants to return to long-term profitability by 2025.
After all: After the General Assembly criticism in the quiet little room, Credit Suisse has at some point been capable of learning. “We look forward to personally welcoming our shareholders at our next Annual General Meeting in April 2023,” Chairman Axel Lehmann, 63, said in a statement. There will be a long dry period for shareholders to finally be able to ask CS management questions again.