Credit Suisse stock tanks 12% after the troubled Swiss bank racks up a multibillion loss and vows to overhaul its business
- Credit Suisse stock fell 12% Thursday after it posted losses of $4 billion, much deeper than expected.
- The Swiss lender plans to restructure after a series of scandals, with big changes at its investment bank.
Credit Suisse shares plunged in European trading Thursday as the scandal-plagued Swiss bank promised to overhaul its businesses after posting a big loss that hugely missed analysts' targets.
The bank booked a net loss of 4.034 billion Swiss francs ($4.1 billion) in the third quarter, it said in an earnings report released Thursday. Analysts had expected a loss of 567.93 million Swiss francs, according to Refinitiv.
Its shares were down 11.8% at 4.21 Swiss francs, recovering somewhat from a 14% fall earlier in the session. In premarket trading, its US-listed stock dropped 11.7%.
Credit Suisse CEO Ulrich Körner attributed losses to "continued challenging market and macroeconomic conditions," particularly in its investment banking division, which posted a pretax loss of $640 million. That compares with 662 million in quarterly income a year ago.
In the wake of the results, Credit Suisse announced a restructuring program that will see its investment bank shrink, a drop in headcount and 15% cost cuts. It also plans to sell a chunk of its securitized products to US investment firms Pimco and Apollo, and it said it is seeking $4 billion in funding for the restructuring.
The strategic overhaul comes after investor jitters over the Swiss bank's financial health drove a fall in its shares earlier in October. At the time, a large Credit Suisse investor described the bank's investment arm was a disaster, and said the lender's credit-default swaps were trading as if a "Lehman moment was about to hit."
In recent years, the Swiss lender has battled a series of scandals, and its investment banking arm has gone through three CEOs in three years. It was caught up in the collapse of Greensill Capital and took a $5 billion hit from the collapse of Archegos Capital Management.
Credit Suisse said it has sealed a $1.5 billion commitment from the Saudi National Bank in its push to raise $4 billion capital for the restructure. That makes the leading Saudi commercial bank the second-largest shareholder with a 9.9% stake.