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First Quarter Loss Expected By Credit Suisse Due To Mounting Legal Costs


20/04/2022


First Quarter Loss Expected By Credit Suisse Due To Mounting Legal Costs
After increasing costs for its legal reserves, seeing a constant stagnation of its commercial activity, and taking a hit from the aftermath of Russia's invasion of Ukraine, Credit Suisse Group expects to announce a loss for the first quarter, the Swiss bank said on Wednesday.
 
The scandal plagued lender is still reeling from billions in losses in 2021, which led a top-level management shake-up, and it is facing new compliance and risk-related investigations.
 
Provisions linked to a variety of previously revealed legal matters, all of which date back more than a decade, will climb by over 600 million Swiss francs ($631 million) to total around 700 million francs, according to the company.
 
Last month, a Bermuda court found that Georgia's former prime minister and his family were owed "significantly in excess of $500 million" in damages from Credit Suisse's local life insurance unit owing to fraud.
 
"The Group will announce its earnings for the first quarter of 2022 on Wednesday, April 27th, and would expect to report a loss as a consequence of this increase in reserves," it said without being more specific.
 
The impact of Russia's invasion of Ukraine on the company's performance would be negative sales and provisions for credit losses of 200 million francs.
 
It said that the first-quarter results will include previously disclosed losses of about 350 million francs related to the decline in the value of its 8.6% stake in Allfunds Group.
 
It stated that weaker business activity and a decrease in capital market issuances had harmed the underlying earnings.
 
These losses would be somewhat offset by a recovery of roughly 170 million francs in reserves for claims against the bankrupt investment fund Archegos, as well as real estate gains of around 160 million francs, according to the company.
 
(Source:www.reuters.com)