The bank will shut down much of its blue chip brokerage business that dealt with hedge funds such as the bankrupt investment firm Archegos, instead invest an additional 3 billion Swiss francs ($ 3.3 billion ) in its private bank for the rich, which will be centralized in a global corporation. .
“Risk management will be at the heart of our actions, helping to foster a culture that reinforces the importance of accountability and responsibility,” said President Antonio Horta-Osorio.
The bank recorded a 21% drop in profit in the third quarter and said it expected to record a net loss in the fourth quarter by writing off its remaining goodwill related to the investment bank for a one-time charge of approximately 1.6 billion Swiss francs.
Credit Suisse plans to hire 500 more private bankers over the next three years, with the goal of having CHF 1.1 trillion in assets under management by 2024, up from the current 0.9 trillion.
Thursday’s announcement is the first step on the road to mastery of the bank chartered by Horta-Osorio, which took over in April as the bank grappled with the fallout from reckless deals.
In the past year, Credit Suisse was fined for arranging a fraudulent loan in Mozambique, tarnished by its involvement with late financier Greensill, racked up $ 5.5 billion in losses during the collapse d’Archegos and was reprimanded by regulators for spying on executives.
It has cast a cloud over the bank, sparked an exodus of key personnel and fueled speculation that the group, whose share price has languished, may even be bought out by a rival.
The bank’s desire to centralize its operations draws lessons from some of its recent failures, including Archegos.
Earlier this year, Credit Suisse released a report accusing Archegos’ focus on maximizing short-term profits and “greedy risk-taking” of failing to steer the bank away from disaster.
Credit Suisse’s financial humiliation stands in stark contrast to that of rival UBS.
Following massive losses and a bailout during the financial crisis, UBS has successfully transitioned from investment banking to wealth management and is now the world’s largest wealth manager with $ 3.2 trillion. dollars in invested assets, roughly three times that of Credit Suisse. ($ 1 = 0.9126 Swiss francs)