ZURICH (Reuters) – Credit Suisse said on Thursday that it was wrapping its global markets and investment banking divisions into a single unit, as Chief Executive Thomas Gottstein puts his first major strategic stamp on the bank.
Switzerland’s second-biggest bank also posted a 24% rise in second-quarter net profit to 1.162 billion Swiss francs ($1.27 billion), blowing past the mean estimate for 700 million Swiss francs in the bank’s own poll of 17 analysts.
“We are today announcing a series of strategic initiatives to improve effectiveness and to generate efficiencies,” Gottstein, who became CEO in February, said in a statement, as he unveiled the plan to merge the investment banking units.
The integration also includes its Asia-Pacific markets business, which previously sat under a regional division.
“These initiatives should also help to provide resilience in uncertain markets and deliver further upside when more positive economic conditions prevail.”
The bank said it was aiming to generate run-rate savings of approximately 400 million francs annually from 2022 onwards through various strategic measures announced.
Credit Suisse said it will also combine its compliance and risk functions under one head.
The bank said it was planning to pay the second half of its 2019 dividend later this year, adding its board would review its share buyback plans in due course.
Rival UBS earlier this month signalled the possibility of resuming share buybacks later this year after a stronger-than-expected performance from its investment bank helped it overshoot expectations for the quarter.
GOTTSTEIN’S MARK
The move to form a globally integrated investment bank marks a departure from the strategy under previous CEO Tidjane Thiam, who repositioned the lender to focus on wealth management and split the investment bank into two divisions.
Credit Suisse has faced criticism over the drag of its capital-intensive investment banking operations, which typically generate far less income than wealth management versus their costs, but has insisted the activities are necessary to service its ultra-wealthy clients.
Both its trading and dealmaking units have hurt results over recent years, with trading marking an improvement in late 2018, just as its dealmaking began to slide.
However the units performed well in the second quarter ahead of the integration, as a frenzy of trading activity and companies shoring up their balance sheet pushed up earnings.
The bank posted a 71% rise in profit at its global markets division, fuelled by a 42% jump in fixed income revenue.
The investment bank’s profit also jumped, with a strong rise in earnings across debt and equity underwriting as well as from advising on M&A deals – outperforming much of Wall Street which saw advisory revenue fall.
Wealth management, meanwhile, saw earnings flag slightly after bumper trading in the first quarter, with its international wealth management unit posting a 22% drop in profit as lower rates ate into margins and it set aside money for potential loan losses.
The bank’s Asia division posed a record quarterly profit of 298 million Swiss francs, driven by investment banking.
(Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields and Himani Sarkar)
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
