Ulrich Koerner, an expert in asset management, has been selected as Credit Suisse’s next CEO, the latest indication of turmoil at the Swiss bank, which on Wednesday declared a strategy review as it battles to rebound from a string of scandals.
The controversies and losses accumulated during the incumbent Chief Executive Thomas Gottstein’s two-year term that has depressed shares and enraged investors have been putting pressure on him for months.
Gottstein’s replacement had been demanded by several investors in recent months, however, the bank had objected.
The announcement of a strategic assessment that may further limit its investment banking business came as Credit Suisse reported a second-quarter loss of $1.65 billion, far short of market expectations.
According to an average of 19 forecasts published by the lender, analysts had predicted a massive negative of 206 million francs. The lender had previously warned of further quarterly loss as turbulence and sluggish customer flows affected its investment bank in June.
Its CET1 equity ratio was 13.5 percent of risk-weighted assets, above both its short-term aim and the market expectation of 13.6 percent. That fell short of both its first-quarter CET1 level of 13.8 percent and its 2024 target of above 14 percent.
Retiring Chief Executive—Thomas Gottstein remarked that their results for the 2nd period of 2022 are unsatisfactory, notably in the Financial Institution, and were also impacted by greater lawsuit reserves and other adjusting items.
Credit Suisse has referred to 2022 as a “transitional” period in which it aims to move past costly scandals that forced a near-total reorganisation of senior management and a restructuring intended to reduce vulnerability, especially in its investment bank, whilst bolstering wealth management.
It has often tried to quell rumours that it would be bought out or divided amid industry consolidation.
Executives at Credit Suisse stated in June that the company may alter some of its core wealth management development ambitions as it concentrates on a risk reversal and advancing technology.
In the near term, the bank wants to lower its cost base from the annualised 16.8 billion it had in the first half of this year to less than 15.5 billion francs. With the third-quarter results, further information about this was due.
It had previously stated that it wanted to accelerate cost savings, speeding up steps adopted as terms of its restructuring in November with the goal of achieving annual fundamental cost savings of between 1 and 1.5 billion Swiss francs by 2024.
According to their estimates, a technical upgrade might result in cost savings of up to 800 million Swiss francs over the foreseeable future, comprising 200 million francs in apiece of the periods 2022 and 2023.
After a swashbuckling attitude to business resulted in billions in losses due to risk-management and compliance mistakes, the bank is tightening controls.
In March 2021, the bank suffered two blows: a $5.5 billion loss due to the failure of American household institution Archegos Capital Management & the closure of $10 billion in supply chain finance funds connected to the defunct British financier Greensill.
Switzerland’s first criminal prosecution of one of its major banks, Credit Suisse was found guilty last month of attempting to prevent funds laundering by a cocaine trafficking group from Bulgaria. It is contesting the judgement.
The price of the bank’s shares has dropped upwards of 40% this year, with a mid-July low of under 5 francs per share. According to data from Refinitiv, its market capitalization is less than 14 billion Swiss francs. Competitor UBS (UBSG.S) of Switzerland reported a second-quarter profit of $2.1 billion on Tuesday, less than analysts had anticipated due to the impact of market volatility on its investment banking & financial advisory operations.