Chairman Urs Rohner offered to forgo his compensation for 2020 of 1.5 million francs and bonuses for the executive board have been scrapped for that year. Rohner is set to step down later this month when Lloyds Banking Group Plc CEO Antonio Horta-Osorio takes over.
According to Alison Williams, Bloomberg banking analyst, “Credit Suisse’s buyback pause and reduced dividend to get its capital position back on track isn’t the cure-all for its financial woes, though may fall short of more bearish fears. Our near-term concerns remain the fallout from Greensill costs, knock-on revenue dents to its prime and asset-management units and elevated control costs, along with lingering regulatory and legal challenges.”
The Zurich-based bank was one of several global investment banks to facilitate the leveraged bets of Archegos, and had tried to reach some sort of standstill to figure out how to unwind positions without sparking panic, people familiar with the matter have said. The strategy failed as rivals rushed to cut their losses.
Global banks including Goldman Sachs Group Inc., Deutsche Bank AG and Wells Fargo & Co. have told investors that they shed their Archegos-linked positions with little financial impact. Nomura Holdings Inc. has signaled it could lose as much as $2 billion.
Credit Suisse’s latest trades came more than a week after several rivals dumped their shares. The bank hit the market with block trades tied to ViacomCBS Inc., Vipshop Holdings Ltd. and Farfetch Ltd., a person with knowledge of the matter said. The stocks traded substantially below where they were last month before Bill Hwang’s family office imploded.
In addition to the Archegos write-down, Credit Suisse may need to set aside 2 billion francs over the coming years for litigation tied to Greensill, according to the JPMorgan analysts.
Startup lender Greensill Capital had borrowed from the bank and helped manage a group of debt funds that were marketed as among its safest products. Now the funds are frozen and being wound down after Lex Greensill’s firm collapsed amid doubts about its lending practices.
Credit Suisse said it will provide an update on the funds in the “next few days.”
Gottstein took over in February 2020 in the wake of a spying scandal that took down his predecessor and pledged a clean slate for 2021 after legacy issues marred his first year. Instead, he’s been overwhelmed by repeated lapses in oversight.
This article was provided by Bloomberg News.