Wednesday, February 11, 2009

Credit Suisse Punts $5.2 Billion

On the heels of UBS's impressive $7 billion fourth quarter loss, Credit Suisse proved that it is truly Switzerland's second-largest bank by posting a $5.2 billion loss of its own.  The 6.02 billion franc loss was higher than the 4.2 billion-franc estimate that analysts had expected after throwing a bunch of darts at a dartboard.  The losses were due to a 3.19 billion franc writedown on leveraged loans and structured products and failed trading hedges.  Furthermore, profit at the private banking unit fell 36% due to a provision for auction-rate securities.  The bank did report an inflow of 2 billion francs of net new money from wealthy clients (perhaps those fleeing from UBS?) and have seen positive new assets in January.  Credit Suisse now anticipates higher returns from its money-management operations and lower returns from the securities units and lowered its "mid-term" goal for returns on equity to 18% from over 20%.     

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