Just as Credit Suisse Group AG (NYSE: CS) undertakes a costly transition away from its investment banking previously, the bank is learning how volatile of wealth management business. Shares of Credit Suisse slumped 10.67% to $14.90 on Thursday trading, after the company announced a large net loss of $5.8 billion, and suffered on wealth management outflow which similar with UBS Group AG (NYSE: UBS) who reported the financial result this week.
The quarterly net loss is a big challenge for Credit Suisse’s chief executive officer, Tidjane Thiam, who was brought in 2015 to turn around the bank’s fortunes.
Since joining Credit Suisse in July, Mr. Thiam has announced that the bank would raise billions of dollars in new capital, slash the cost and reduce the size of its investment bank.
“The environment has deteriorated materially during the fourth quarter of 2015,” Mr. Thiam said in a conference call with analysts. “A combination of uncertainties on Chinese growth, the abrupt drop in oil prices, large industry mutual fund redemptions of financial assets, asynchronous policies by leading central banks, lower liquidity have all contributed to making the fourth quarter of 2015 challenging with lower levels of client activity, lower levels of issuance and material shifts in the prices of some asset classes.”
Credit Suisse cited a lower level of activity among its clients in the fourth quarter, just like UBS. Both of the bank’s private banking businesses in Switzerland and the international wealth management unit reported net asset outflows in the fourth quarter.
The bank’s global wealth management business, which is focused on expanding in emerging markets including Eastern Europe and sub-Saharan Africa, reported a pretax loss of 20 million francs in the quarter, compared with a pretax profit of 423 million francs in the same quarter last year.
Credit Suisse, which is based in Zurich and has large operations in New York and London, also announced its plans to cut costs by billions of dollars until the end of 2018, mention it would cut 4,000 job positions out of currently 48,000 employees worldwide.