GLOBAL - Credit Suisse Group (CSG) is expected to report a loss of around CHF 300m when the Swiss financial giant announces its Q3 results next month.
In an unprecedented step for the firm, CSG cited “negative market developments” as the reason behind the figures, which also see an approximately break-even operating result.
According to a source, figures for Credit Suisse Asset Management were “nothing special”, inferring that the unit was also likely to break even.
The warnings follow news that investment banking unit CSFB is to slash up to 2,000 jobs globally as part its cost cutting. The firm could not say how many of these would be in the UK. This move - and other non-staff costs cuts - are expected to save US$1bn by the end of 2002.
Other factors affecting CSG’s results are an operating loss at CSFB, lower profits from the insurance businesses, a write-down on CSG’s holding in Swiss Life, and reserves for unsecured credit exposure to SAirGroup. CSG has also lost about CHF400m through its investment in Swiss Life as well as “substantial unrealised gains in other financial investments”, said the firm. CSG also recognised provisions of around CHF200m in its unsecured exposure to SAirGroup. CSFB and will report an estimated operating loss of US$120m (CHF200m). Revenue for the Q3 was down approximately 20% on the second quarter and 26% on the first quarter. CSFB (USA) will also report losses.
CSFB CEO John Mack said: “To compete effectively with other top-tier financial services firms, we need to drive down costs.
“The steps we are taking today will more closely align the size of our business with changing market conditions and bring our cost structure in line with that of our major competitors. These steps require tough choices ... But they are critical if CSFB is to continue to compete effectively and to build its business.”
The Group's insurance businesses (excluding Winterthur Insurance) will also report significantly lower results in the second half of 2001 due to lower investment income.
Results for Credit Suisse Private Banking and Credit Suisse Banking results were more upbeat, but CSG retains a cautious stance for Q4. Transaction volumes are expected to stay low, and markets will continue to be difficult, said the firm. Full results will be announced on November 20, 2001. By Madhu Kalia
The PPI has unveiled a policy paper outlining current considerations and policy debates relevant to DC scheme default strategies. Kim Kaveh explores some of its views.
The £30bn local government pension pool has appointed Quoniam and Robeco to manage an active equity portfolio worth around £400m.
The volume of insured buyouts from FTSE 100 defined benefit (DB) schemes could increase from £5bn to £300bn by 2029, according to Lane Clark & Peacock (LCP).