Credit Suisse Plunges To 25 Year Lows After Posting Enormous $5.8 Billion Q4 Loss

Tyler Durden's picture




 

Seven days ago, Deutsche Bank turned in what various sellside desks described as “horrible”, “grim” results for both Q4 and 2015 as a whole.

The bank posted its first annual net loss since the financial crisis, reporting red ink that totaled more than $7 billion as investment banking revenue fell plunged by some 30%.

On Thursday, we learn that Credit Suisse lost nearly $6 billion in the fourth quarter. The 2015 net loss came to nearly $3 billion. 

Shares in the Swiss bank plunged 13% to their lowest levels since 1991 as Tidjane Thiam’s “turnaround” hit a rather large bump in the road.

The shares are down 32% this year alone.

The $5.8 billion quarterly loss is the largest since the crisis and it would certainly appear that the focus on wealth management (as opposed to investment banking) comes at a rather inopportune time, given the emphasis placed on AsiaPac where Thiam plans to double pretax income in just two years. 

"The latest report is the first to reflect Credit Suisse’s new structure under Chief Executive Tidjane Thiam, who took over in July and announced his strategic plans for the bank in October," WSJ writes. "Those plans include bolstering wealth management, particularly in regions such as Asia, while reducing the resources directed to its investment bank."

Some of the loss was attributable to a CHF3.8 billion impairment charge tied to the costly 2000 acquisition of investment bank Donaldson, Lufkin & Jenrette for $11.5 billion which The Journal reminds us was “a price widely viewed at the time as expensive.

But even as the Street expected a rather disappointing performance, “these numbers are terrible,” to quote Dieter Hein, an analyst at AlphaValue based near Frankfurt who spoke to Bloomberg. “In the mid- to long-term, it’s right to focus on growth in Asia, but what bad timing given the current environment.”

Yes, “what bad timing.” And “what” horrific results across the board. Analysts were expecting things to be bad (consensus was for a CHF4.97 billion loss) but the CHF5.8 billion was far worse than most anticipated. Even excluding the goodwill write-down, as well as significant litigation and restructuring charges, the underlying pre-tax loss was “far worse” than consensus, Citi’s Andrew Coombs writes. “Underlying revenues are 7% below consensus... overall we view these as very poor results,” he said on Thursday.

Restructuring and litigation costs were CHF355 million and CHF564 million for Q4, respectively. 

Investment banking was a nightmare as revenues fell 17% in 2015 due to "lower debt and equity underwriting" attributable to "volatility in capital markets." "They're the ones we control the least," Thiam said of the Global Markets and Investment Banking & Capital Markets units. "We want to have an investment bank with stable earnings," he added. Here's what investment banking looked like in Q4:

And here's a look at equity and fixed income trading:

"Revenue from fixed-income trading fell by more than two thirds -- a much steeper decline than at Deutsche Bank or any of its U.S. peers," Bloomberg notes. The culprits: widening HY spreads in the US, "subdued client activity" and of course, "significant mark-to-market losses." 

"Revenue at the units that house trading, advisory and underwriting businesses outside of Switzerland and Asia, slumped 35 percent to a combined $1.5 billion," Bloomberg continues. "Excluding goodwill impairments and restructuring costs, the units posted a pre-tax loss of $761 million combined for the period, compared with a profit of $516 million a year earlier."

Contrary to reports, the bank will not, Thiam says, be selling a portion of the investment banking business to Wells. 

"The environment has deteriorated materially during the fourth quarter of 2015 and it is not clear when some of the current negative trends in financial markets and in the world economy may start to abate," Thiam said, in an attempt to explain the results.

The bank will cut some 4,000 jobs in an effort to supercharge cost savings. Bonuses were cut by 11% last year. “We continue to believe that wealth management, supported by our investment banking capabilities, remains a uniquely attractive long-term opportunity,” Thiam continued, justifying the shift away from investment banking. The international wealth management unit lost CHF20 million in Q4 and saw net asset outflows of CHF4.2 billion during the period.

Here's Citi's Coombs summing things up outlook wise: "We do not believe the 2018 targets are achievable."

No, probably not, because as Andreas Brun, an analyst at Zuercher Kantonalbank put it after the results: "Even to just get in the direction of their goals, they need the market as a tailwind, but at the moment they have rough winds blowing at them from all directions.”

Indeed.

*  *  *

Full press release (because you really have to read it to believe it)

Csg Media Release 4q15 En

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Thu, 02/04/2016 - 08:55 | 7138956 Croesus
Croesus's picture

Crash, you bastards! 

Thu, 02/04/2016 - 09:06 | 7138992 Oldwood
Oldwood's picture

Thank God it was only money!

Thu, 02/04/2016 - 09:08 | 7139000 XAU XAG
XAU XAG's picture

Bonuses were cut by 11% last year.

 

 

Poor lams

Thu, 02/04/2016 - 09:14 | 7139023 max2205
max2205's picture

Not bad enough for a bailout....

Thu, 02/04/2016 - 09:15 | 7139025 duo
duo's picture

Didn't DB receive all the wire transfers of money for the 9/11 hijackers?

Thu, 02/04/2016 - 09:40 | 7139096 Antifaschistische
Antifaschistische's picture

bonuses when you're losing billions. what a scam.  Just one more indicator that "publically traded companies" think last about shareholders and first about the collection of employees, and the VIPs incomes are even more important.

Thu, 02/04/2016 - 15:39 | 7140750 Government need...
Government needs you to pay taxes's picture

You think those investment bankers whose bonus was $2.0 million in 2014 are going to work harder in 2016 because their 2015 bonus was 'only' $1.8 million?  Hard times, those.  I believe their US HQ is 11 Madison Ave.  Good news, there's a park just down the block with LOTS of trees, lamp posts, and homeless.  Those homeless deserve to witness a good hanging.

Thu, 02/04/2016 - 10:39 | 7139406 johnnymustardseed
johnnymustardseed's picture

How can a priamry dealer bank lose money when they get free money from the FED?  What does it matter anyways, the bail out has never stopped and it certainly never will.

Thu, 02/04/2016 - 08:55 | 7138957 buzzsaw99
buzzsaw99's picture

frikken breaks my heart. /s

Thu, 02/04/2016 - 09:04 | 7138988 Son of Loki
Son of Loki's picture

We'll miss credit suisse.

Thu, 02/04/2016 - 09:23 | 7139046 Oldwood
Oldwood's picture

Miss suisse???

Thu, 02/04/2016 - 09:09 | 7139007 XAU XAG
XAU XAG's picture

"Contrary to reports, the bank will not, Thiam says, be selling a portion of the investment banking business to Wells."

 

ROTFLMAO

Thu, 02/04/2016 - 08:57 | 7138963 R.R.Raskolnikov
R.R.Raskolnikov's picture

Something is cracking. First Deutsche Bank, Now Credit Suise. Hmm looks similar to the sub-prime mortage crisis when financial institutions were reporting massive losses... Or maybe this time is different.

Thu, 02/04/2016 - 08:59 | 7138972 Croesus
Croesus's picture

Nah, it just means they'll bring back QE...gotta save those precious banks...free markets, and so on. 

Thu, 02/04/2016 - 09:02 | 7138979 R.R.Raskolnikov
R.R.Raskolnikov's picture

This bullmarket is just about to start. Nasdaq 6000 points here we come!

Thu, 02/04/2016 - 15:44 | 7140769 Government need...
Government needs you to pay taxes's picture

Bull market, as in Venezuelan bull market.  Stocks up 400% in 2015, BUT inflation running @ 700%!

Thu, 02/04/2016 - 09:11 | 7139009 barroter
barroter's picture

Yep...this is the only time the free markets LOVE socialism...when they can dip their hands into citizen's pockets to fix private failure.

Thu, 02/04/2016 - 09:09 | 7139001 Oldwood
Oldwood's picture

All the better to fuck us with....again!

Thu, 02/04/2016 - 09:42 | 7139104 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Yes, it's different. It's worse.

Thu, 02/04/2016 - 08:58 | 7138969 jubber
jubber's picture

keep an eye on Deutsche... their 6.25% CoCo bonds just hit a new ATL

Thu, 02/04/2016 - 09:01 | 7138977 R.R.Raskolnikov
R.R.Raskolnikov's picture

Good remark. When those CoCos got triggerd you will got one massive share delution, resulting in a cascade of a plunge of the share price, because more people are dumping their shares.

The economy is b00ming to tha b0tt0m bitches!

Thu, 02/04/2016 - 09:06 | 7138990 Cautiously Pess...
Cautiously Pessimistic's picture

True.  But a good 'month end mark to fantasy', er uh... I mean 'mark to market', might gloss things over a bit, right??  Wink, wink..nod, nod.

Thu, 02/04/2016 - 09:09 | 7139002 R.R.Raskolnikov
R.R.Raskolnikov's picture

I agree!

Thu, 02/04/2016 - 09:11 | 7139010 Oldwood
Oldwood's picture

Can't they use a seasonal adjustment? The season of shit.

Thu, 02/04/2016 - 09:13 | 7139018 R.R.Raskolnikov
R.R.Raskolnikov's picture

I don't know. Let's ask Jim Cramer. If he says everything is fine, than everything is fine.

Thu, 02/04/2016 - 09:25 | 7139049 Oldwood
Oldwood's picture

There sure are a lot of financial experts out there. Too bad all of their paychecks depend on their "opinion".

Thu, 02/04/2016 - 09:13 | 7139017 barroter
barroter's picture

I like "mark to unicorn."

Thu, 02/04/2016 - 08:58 | 7138970 Bill of Rights
Bill of Rights's picture

" err lets get ready to rumble!!! "

Thu, 02/04/2016 - 08:59 | 7138974 Chippewa Partners
Chippewa Partners's picture

It's what rich people do.  Invest their "wealth" with firms who evaporate their own shareholders wealth.  

What a neat business.   What brilliant rich people. 

Thu, 02/04/2016 - 09:14 | 7139021 barroter
barroter's picture

I thought it was the poor who invented the credit default swap, collaterallized debt obligations and forced S&P to rate doghshit tranches as AAA?

Thu, 02/04/2016 - 09:01 | 7138978 Dr. Engali
Dr. Engali's picture

Print faster Mario, you prick.

Thu, 02/04/2016 - 09:02 | 7138980 FX223
FX223's picture

BDI new ATL 303...everything is wonderful, so what's on tonight?

Thu, 02/04/2016 - 09:02 | 7138982 JamaicaJim
JamaicaJim's picture

Jamaica Jim’s CAMPAIGN CHANNELING THE CANDIDATES REPORT

*”JJ” – through means of taught Rastafarian ways, is able to channel the inner thoughts/grab conversations out of the air/catches whiffs of sentiment of others.

Throughout 2016, JJ is channeling candidates for the Kabuki Theater of the Absurd “race” for the Presidency. These powers come and go….stay tuned for updates Mon….

THESE ARE TODAYS’ CHANNELINGS….

FEBRUARY 4, 2016………

Donald Trump: (inside his office, speaking)…”OK…..so we go after that Cruz guy….what a slimeball….fire that guy who brought the coffee in…..just do it….teach him to tuck his shirt in….fire him anyway…WHERE’S MY PHONE???”

Ted Cruz: (on the phone) “…….no…no..I told him to burn it………what’s that?...OK..so I say that, but don’t mean it…got it…..is Lloyd in?.....no…OK….keep my phone handy…got it….”

Marco Rubio: (also on the phone) “…..look, I’m cuter than Cruz….look at his waist line….plus, I’m really Hispanic….I can a la ~espanol 20% of the vote….dump him…..I told you I’d sell my……………

…what? (muffled voices…Dimon on line 2?”)…I gotta go. LaRaza is in the lobby..”

Hillary Clinton: (in staff meeting, speaking) “………..Now, I told you bitches that NO more infiltrators to my public meetings!!! ONLY my lesbian friends and the dumb fat guilt ridden guys…the pussy whipped….how many times do I have to tell you???!!!....

Bernie Sanders: (on phone) “…….OK, so how many new donations do we have? I’m flying coach again…dammit…..I hate this “sincere shit”…WHO CAN LOSE SIX IN A ROW???...listen…I gotta go vote on raising taxes..the off to New Hampshire…..yes ….yes…..coach…..fuck!

Carly Fiorina: ( to lone staffer) “……well, fuck”

Mike Huckabee: (to wife) “……you know, honey, I am going to miss all that free food and the pleasant fiction of thinking I had a chance to/Mrs. Huckabee: “Oh shut up, you asshole!”

Ben Carson: (to himself)….”Do I quit?...do I…..stay the course…?.....what did I have for breakfast? …oh that’s right…I scalpeled an egg…wait….did I?”

Chris Christie: (on phone to campaign manager) “….look, we stay in and stay low…gotta be a cabinet post in there somewhere….(farting)…….no, no, no, no…and FUCK Giuliani, OK? ….now unless you have some food…hot food….I’m hanging up”

Rand Paul: (on phone with father) “…..OK, OK, OK…I suck at campaigning…you weren’t so hot yourself, old man….look….I can be effective as a….what……OK…knock off the jokes about my hair Dad…”

Rick Santorum: (with wife in family truckster) “…look honey I../(wife interrupts)..shut UP about the race asshole! I TOLD you people in Iowa wouldn’t remember you!”

Thu, 02/04/2016 - 09:19 | 7139035 Croesus
Croesus's picture

Haha...that's awesome!

Thu, 02/04/2016 - 09:02 | 7138983 lordbyroniv
lordbyroniv's picture

fuck europe

Thu, 02/04/2016 - 09:04 | 7138986 Paul John Smith
Paul John Smith's picture

Firing people is a wonderful short-term solution ...

(but eventually you run out of people to fire)

Thu, 02/04/2016 - 09:45 | 7139112 _ConanTheLibert...
_ConanTheLibertarian_'s picture

Just hire a bunch so you can fire them.

- sincerely P. Krugman -

Thu, 02/04/2016 - 09:06 | 7138993 XAU XAG
XAU XAG's picture

The bank will cut some 4,000 jobs in an effort to supercharge cost savings.

 

Just what the economy needs right now...............4000 new business advisors! LOL

Thu, 02/04/2016 - 09:38 | 7139026 barroter
barroter's picture

At least the food pantry lines will have people dressed in nice suits.

Thu, 02/04/2016 - 09:09 | 7139004 mayhem_korner
mayhem_korner's picture

 

 

Cue Leslie Nielsen:  https://www.youtube.com/watch?v=5NNOrp_83RU

Thu, 02/04/2016 - 09:13 | 7139019 QuarkJaguar
QuarkJaguar's picture

 The calls for the next leg down in March seem reasonable. Wont be much happening in Asia once the break starts tomorrow.

Thu, 02/04/2016 - 09:15 | 7139020 Kagemusho
Kagemusho's picture

This is getting freaky. For the past 3 days, every time the Tylers post something like this, I click over to the site I use to monitor PM prices, and they jump upwards. It's getting reflexive, now.

A few more articles, and we'll see $1200 gold. To paraphrase a line from the Forrest Gump movie, "Post, Tylers, post!"

Thu, 02/04/2016 - 09:15 | 7139024 sudzee
sudzee's picture

No problem. Bail-in solves all.

Thu, 02/04/2016 - 09:16 | 7139030 Lorca's Novena
Lorca's Novena's picture

Whoever wrote this press release is simply Peddling Fiction.

Thu, 02/04/2016 - 09:30 | 7139069 Ghostdog
Ghostdog's picture

Some dope from CS was on bubblevision yesterday saying the Spooz were going to 2350 by year end... Nothing like hail mary desperation in the hopes of trying to sucker people in to drive the market higher so he isnt out of a job... I thought the super bowl was on Sunday? LOL

Thu, 02/04/2016 - 09:31 | 7139073 cpnscarlet
cpnscarlet's picture

Part of the reaction perhaps -

 

The gold train left early this AM. Many missed it  I bet.

Thu, 02/04/2016 - 09:32 | 7139075 cpnscarlet
cpnscarlet's picture

Part of the reaction perhaps -

 

The gold train left early this AM. Many missed it  I bet.

Thu, 02/04/2016 - 09:34 | 7139082 Lucky Leprachaun
Lucky Leprachaun's picture

Just appointed an affirmative action CEO from AFrica. What can possibly go wrong?

Thu, 02/04/2016 - 09:36 | 7139087 sudzee
sudzee's picture

Worldwide paper asset deflation and for most there is no way out cause physical cash is limited. Move to negative rates to tax cash. Bail-in in advance of ban on physical cash. All out money creation by c/b's to fund liabilities (hyperinflate).

i doubt it will work cause the infrastructure for all electronic fiat doesn't exist for the vast majority of world population. 

Thu, 02/04/2016 - 09:42 | 7139105 NEOSERF
NEOSERF's picture

Funny, all of this is happening in the middle of ECB with deposit rates at -0.3% and 1.46T Euro bond buying easing which by many accounts starts to get at most of the available bond issuance so where do they go now...Jawbone higher; check. Negative interest rates; check.  QE at upper limits; check.  Overrun by immigrants and terrorism; check.  All that is left is to somehow start a war so that ALL rules can be suspended, debt payment can be suspended and assets can be siezed...there are no other real options.

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