A Swiss flag flies over a Credit Suisse sign in Bern, Switzerland
FABRIC COFFRINI | AFP | Getty Images
The Swiss lender now expects a pre-tax loss of around 900 million francs (960.4 million US dollars) for the first quarter after taking on a burden of 4.4 billion francs as a result of the scandal.
“The significant loss in our Prime Services business due to the failure of a US-based hedge fund is unacceptable,” CEO Thomas Gottstein said in a trading update.
Brian Chin, CEO of the Investment Bank, and Lara Warner, Chief Risk and Compliance Officer, will be stepping down from their roles with immediate effect, the bank said.
Last week, Credit Suisse announced that it would be part of the US hedge fund Archegos Capital collapses. The bank was forced to dump a sizeable amount of shares in order to sever ties with the troubled family office.
The board of directors has also waived its bonuses for the 2020 financial year, the bank announced on Tuesday. Chairman Urs Rohner gave up his “chairwoman” of 1.5 million francs.
At its Annual General Meeting on April 30, Credit Suisse, together with the amended compensation report, will propose a dividend of CHF 0.10 gross per share.
“In particular, following the major US hedge fund issue, the board of directors is changing its proposal to distribute dividends and withdrawing its proposals for variable compensation for the board of directors,” the Swiss lender said in a trade update.
The company has suspended its share buyback program and does not intend to resume buying shares until it has returned to its target capital ratios and restored its dividend.
Last month, the bank announced a restructuring of its wealth management business and suspension of bonuses to help stem the damage from the collapse of UK supply chain finance firm Greensill Capital.
The Board has initiated two separate inquiries into the Greensill and Archegos sagas, to be conducted by third parties, “to examine not only the direct problems that arise from each of them, but also to reflect the broader implications and lessons learned.” “”
On May 1, Chin will be replaced at the helm of the investment bank by Christian Meissner, currently co-head of the international wealth management investment banking consultancy at Credit Suisse and deputy chairman of investment banking.
Joachim Oechslin was appointed Interim Chief Risk Officer and Thomas Grotzer Interim Global Head of Compliance on Tuesday. All three will report to CEO Gottstein.
“Combined with the recent problems related to supply chain funding, I have found that these cases have caused significant concern to all of our stakeholders. Together with the Board of Directors, we are determined to address these situations. Serious lessons are learned. “Said Gottstein in a statement.