Switzerland’s scandal-hit banking giant Credit Suisse said Wednesday that CEO Thomas Gottstein is resigning after 2 1/2 years in the job, as he announced "disappointing" results, plunging revenues and a net loss in the second quarter.
These are the latest signs that the top-drawer Swiss bank is not yet finished with a string of troubles in recent years.
The Zurich-based bank said asset management head Ulrich Koerner, whom Gottstein brought onto its board from rival UBS last year, will take the helm starting Monday.
The announcement is the culmination of months of pressure on Gottstein over a tumultuous two-year tenure characterized by hammered shares and angry investors, some of whom had called for the chief executive to be replaced.
Credit Suisse also announced a new "strategic review" that, among other things, will aim to lower costs in the bank’s latest efforts to recover from a series of scandals and losses.
Gottstein, a 23-year veteran of the bank, cited "personal and health-related considerations" weighing on his move to hand over to Koerner, who also worked for Credit Suisse earlier in his career.
Koerner, who runs Credit Suisse’s asset management unit, returned to the bank after a stint at UBS Group, where he most recently served as an adviser to the CEO from 2019 to 2020.
He ran UBS Asset Management from 2014 to 2019. Koerner was also previously a senior executive at Credit Suisse Financial Services and ran the Swiss business.
Overall, Credit Suisse reported a net loss of nearly 1.6 billion Swiss francs (about $1.7 billion) in the second quarter, from a profit of 253 million francs in the quarter a year ago. Revenues plunged 29% to 3.6 billion francs, down from 5.1 billion a year ago.
Credit Suisse said that "the combination of the geopolitical situation following Russia’s invasion of Ukraine and significant monetary tightening by major central banks in response to inflation concerns have continued to result in heightened volatility and client risk aversion so far this year."
It also said that the current market environment "has had an adverse impact on client activity across both wealth management and the investment bank." Those represent two of the bank’s most important operations.
Credit Suisse said widening credit spreads had caused a nearly quarter-billion-dollar loss in its leveraged finance portfolio. It also cited provisions for legal costs.
"Our results for the second quarter of 2022 are disappointing, especially in the investment bank, and were also impacted by higher litigation provisions and other adjusting items," Gottstein said.
Credit Suisse has run into a series of troubles recently, including bad bets on hedge funds and a spying scandal involving UBS. Also, a Swiss court fined the bank more than $2 million last month for failing to prevent money laundering linked to a Bulgarian criminal gang more than 15 years ago.