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U.S. fine chokes Credit Suisse profits

Tuesday, July 22, 2014 - 01:41

Credit Suisse suffers the aftershock of its 1.6 billion Swiss franc settlement with U.S. authorities for helping clients evade taxes - the bank reporting its biggest quarterly loss since the financial crisis in 2008. David Pollard reports.

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It's a big loss for the Swiss banking giant. Seven hundred million Swiss francs in the second quarter. Much of that down to a 1.6 billion Swiss franc settlement with U.S. authorities over helping clients evade taxes. Not a only big loss, but much bigger than the forecast 580 million - and the most sizeable since the height of the financial crisis. But the other surprise: the numbers still aren't that bad, according to Andrea Williams of Royal London Asset Management. SOUNDBITE (English) ANDREA WILLIAMS, SENIOR FUND MANAGER, ROYAL LONDON ASSET MANAGEMENT, SAYING: "The loss was as expected because people knew the size of the charge. I think the disappointment was in the private banking side where the gross margin was a little bit weak but the funds, the funds money flows were good and their capital ratio looks quite good and they're talking about a higher level by the year end. So I think they're okay." In fact, Credit Suisse's private banking won 10 billion francs of net new money in the quarter - a key indicator of future revenue. Another bright spot: a four percent rise in sales and trading for the fixed income unit. Commodities trading though is to become a thing of the past. SOUNDBITE (English) ANDREA WILLIAMS, SENIOR FUND MANAGER, ROYAL LONDON ASSET MANAGEMENT, SAYING: ''They're sort of reshaping the bank generally. They're not going to the extent of UBS who have withdrawn from a lot of the IB activities, but they're sort of trying to focus on where their strong market positions are.'' After similar cut backs at Deutsche Bank, JP Morgan and Barclays, Credit Suisse is dumping commodities in favour of its private banking. That unit showed a 39 per cent drop in revenue because of the U.S. fine. The fine itself incurred for past misconduct which, said chief exec Brady Dougan, the bank deeply regrets.

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U.S. fine chokes Credit Suisse profits

Tuesday, July 22, 2014 - 01:41

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