Credit Suisse Group AG followed CitiGroup Inc. and Merrill Lynch & Co in the wave of unprofitable third quarter results with trading losses of $1.5 billion.
Switzerlands bank registered the losses on buying and selling securities of financial institutions, convertible bonds, and on certain proprietary trading activities.
The bank lost 367 million francs on investments in preferred and hybrid securities on financial institutions including Fannie Mae and Freddie Mac in the quarter. Short selling restriction resulted Credit Suisse in a 706 million-franc loss from convertible securities and 609 million franc loss in take over and long short operations.
Even excluding trading losses, revenues at the investment bank are down 34 percent from a year ago. Credit Suisse refused to join UBS which got $59.2 billion rescue package from the Swiss government and the central bank. To demonstrate the ability to emerge from difficulties independently from the government bank raised 10 billion francs from investors in Qatar, Israel and Saudi Arabia.
Comparing with previous year private banking division declined to 789 million francs with pretax loss of 58 million francs in asset management. Net new money in the third quarter made up 11.3 billion francs and 3.2 billion francs in corporate and retail banking business.
The third quarter and particularly September were very extreme in terms of market movements,” says Brady Dougan, chief executive officer. It is just a validation of the strategy of continuing to reduce the risk in the investment bank, diversifying the revenue streams, and, if anything, just makes us want to redouble the efforts to do so.
L.D.