With an overall strategic shift rolled out in November that may not bear fruit until 2023, Credit Suisse Group AG is asking its investors to stand by for the long-term payoff. In the meantime, it is banking on its honesty and transparency by making it abundantly clear this is the firm's worst annual performance in five years. A $2.2 billion fourth-quarter loss as well as a lackluster start to 2022 are compounded by the need for restructuring and pay increases to retain senior banking talent.
CEO Thomas Gottstein said, "This will not be a quick fix and we expect 2022 will be a transition year… but we have made clear progress in creating the conditions for a much more stable and predictable bank.” With the help of new Chairman Axel Lehmann, Gottstein will be charting a profitable path forward that will hopefully garner support from shareholders and the firm's own staff—despite the fact that Wall Street rivals are breaking records left and right. In fairness, Credit Suisse is recovering from one of its choppiest periods since the financial crisis, and is also still reeling from the March 2021 collapses of clients Archegos Capital Management and Greensill Capital.
Though its leadership is now showing confidence about the future, the firm has been beset by several C-suite staffing woes and scandals in recent years. Former CEO Tidjane Thiam was forced to resign in early 2020, after an investigation discovered that private detectives were hired to spy on former head of wealth management Iqbal Kahn following his move to competitor UBS. Ex-chairman Antonio Horta-Osorio, whose plan for recovery entailed exiting the prime brokerage business central to the Archegos collapse and a uniform reduction of risk across Credit Suisse's operations, made a swift departure last month after repeatedly breaching COVID-19-related quarantine rules.
