Credit Suisse is going through an almost existential crisis now, as the new chairman António Horta-Osório, declares reforms and restructuring of the lender.
The first change he intends to bring is the exit from the prime brokerage business that gave them a $5.1 billion loss this year. It is the unit that serves hedge funds and the unit that experienced severe loss after the collapse of Archegos Capital.
These changes are part of the six months of planning by the new chairman, who began since his appointment in April earlier this year.
He declared that the new company policy will be risk management and will give importance to accountability and responsibility.
But this revamping seems not to have excited the shareholders, as the share fell 5 percent after the presentation at the investor day. Citibank analyst Andrew Coombs said that the change was sensible but not radical for investors hoped it to be.
The reforms coincided with the third quarter result, which showed a rise of 26% in a pre-tax profit earlier this year, because of its strong performance in its wealth management system and the third quarter for its domestic Swiss bank.
This CHF 1bn profit beat many forecasts.
The wealth management business saw an increase in revenue by 3% earlier this year, similarly, bank revenue also saw a revenue spike by 10%. They also released CHF 144m worth of provisions for credit losses.
Its common equity tier 1 ratio rose to 14.4%, above its 10.7% minimum.
Its $300m revenue loss in the Archegos collapse, has made it take steps to de-risk its prime brokerage business. Compared to other investment banks in the US, EU, and domestically its equity division reported a fall of revenue by 9%.
On the whole Archegos incident, the bank lost $5.4bn initially out of that they recovered $257m. But they collectively lost $10bn, becoming the hardest hit among the international lenders.
But they will not exit the prime broking field completely as they will continue for two areas, Apac Delta One and Index Access. But they are not seen as significant, it is just to serve their ultra-rich Asian clients.
One of the earliest objectives for Horta-Osório is to save the face of the bank from the controversies it has been embroiled in. It includes the settlements with regulators from three countries over the Mozambique tuna bond scandal.
Last month they agreed to pay a fine of $475m and forgive $200m of the debt owed by the African nation. It is in part of a series of coordinated settlements with four regulators in three nations in the tuna bond scandal.
Another objective is the conclusion of the year-long Finma investigation regarding corporate espionage.
The bank will set aside CHF 564m for litigation relating to many matters, including a potential lawsuit by investors who lost their money after the collapse of Greensill Capital.
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