Credit Suisse Had No Blind Spots on Writedowns, Rohner Saysby
Credit Suisse Group AG managers were aware of the trading positions that have forced the bank to take almost $1 billion of writedowns over the past half year, Chairman Urs Rohner said.
“There were no blind spots,” Rohner said Thursday when asked about the matter at a conference in Zurich. “The question is how the positions are managed, valued and traded.”
The chairman’s comments add a fresh account of how the losses came to light. Chief Executive Officer Tidjane Thiam said last week that traders took large, risky positions, catching himself and other top executives off guard. Thiam, CEO since July, said he learned of the extent of the problem only in January and took steps then to address it.
A Credit Suisse spokesman reiterated Thiam’s comments on Thursday after the remarks by Rohner, who said no limits on positions were breached. While Thiam has also said traders didn’t act improperly, the CEO has questioned whether those limits were low enough.
The bank posted a bigger-than-expected loss in the fourth quarter as a result of $633 million in writedowns on mainly distressed credit and securitized pools of risky loans that predate Thiam’s arrival at Credit Suisse. As of March 11, it was projecting further writedowns of $346 million that, combined with a downturn in global markets that has depressed trading revenue, will probably wipe out first-quarter profit, Thiam said.
The bank ramped up its restructuring in light of the losses, adding 2,000 job cuts to the 4,000 already planned this year and raising its cost-savings target by 800 million francs ($831 million) by the end of 2018. Thiam had already reorganized and overhauled leadership of the bank in October, placing greater emphasis on wealth management.
The bank is also stepping up efforts to exit areas that don’t mesh with its new strategy, with plans to dispose of another $25 billion or so in risk-weighted assets. Positions in distressed credit, European securitized products and long-term illiquid funding are being wound down, it said last week.