The goodwill impairment charge of 3.8 billion francs is primarily related to its acquisition in 2000 of USA investment bank Donaldson, Lufkin & Jenrette for $11.5 billion-a move that was meant to help the Swiss bank vie with Wall Street’s biggest firms.
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As Credit Suisse absorbs both the impairment and recent market turbulence, it plans to cut about 4,000 jobs as it seeks to ramp up billions of dollars in cost savings. Net revenue fell 34% to 4.2 billion francs, the bank said.
Investors and analysts have generally cheered Credit Suisse’s shift in direction, which could spare it from some of investment banking’s volatility. The investment bank’s consulting segment also reported profit declines.
The bank recorded a loss of 5.83 billion francs for the fourth quarter, reflecting some of the changes made in its operations. Those plans include bolstering wealth management, particularly in regions such as Asia, while reducing the resources it directs to its investment bank. For the year, the net loss was 2.9 billion francs, compared to a net profit of 1.9 billion a year earlier. Thiam pointed to a challenging quarter and cited a sharp drop in oil prices, “asynchronous” policies by top central banks, lower liquidity, a strong Swiss franc and “uncertainties on Chinese growth”. Last year, the bank reported a gain of CHF6.3 million.
Just over four months on from the strategy announcement, many are still unsure how Credit Suisse will hit growth targets, which include more than doubling Asia Pacific pre-tax income by 2018.
“Market conditions in January 2016 have remained challenging and we expect markets to remain volatile throughout the remainder of the first quarter of 2016 as macroeconomic issues persist”, Tidjane Thiam, who became the bank’s CEO in July, said in a statement.
But the division also saw its pre-tax profit fall 58 percent to 377 million Swiss francs, after suffering a 617-million loss in the fourth quarter.
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On Thursday, the bank specified those details, saying that 4,000 of its 48,200 jobs worldwide would be cut in the coming years and that the restructuring programme would be accelerated.
