In an unusual preliminary announcement Credit Suisse indicated that its losses for 2002 could reach SFr 3.4 billion ($2.48 billion) while fourth quarter losses might be as high as SFr. 1 billion ($730 million). It will present its official results at the end of February.
Switzerland’s second largest banking group, the parent of First Boston, the U.S. investment bank, has been hit by a number of problems this year, including the downturn in the investment markets, the costly settlement of lawsuits brought by New York’s Attorney General Eliot Spitzer over IPO manipulation and the apparent lack of independence of its securities analysts, and the poor performance of its Winterthur insurance group.
According to a report from Reuters News Agency CSFB will take a $450 million charge in the fourth quarter for legal exposures. The charge, $293 million after tax, takes into account private lawsuits covering the lack of independence of its research analysts, the alleged favoritism in making initial stock offerings, Enron and other related litigation.
The bank is aiming to restore earnings in 2003. Reuters quoted recently appointed CEO John Mack as indicating that, “While we expect challenging market conditions to continue throughout 2003, we are working to restore the group to profitability.” The article also noted that the bank has already cut $3 billion in expenses at CSFB since late 2001 “amid the most severe markets downturn in a generation.”
A surprising bright spot appears to be Winterthur, which, according to Reuters, CSFB said had “returned to profitability in the fourth quarter.”