Credit Suisse issues profit warning caused by jump in legal costs

The bank, beset by a string of controversies, has put aside an extra 600m Swiss francs for unspecified cases

Credit Suisse has announced it is likely to report a first-quarter loss owing to a jump in legal costs, as the beleaguered bank tries to draw a line under a string of scandals.

The Swiss lender issued the profit warning before its scheduled earnings report next week, saying it would be putting aside an extra 600m Swiss francs (CHF) (£485m) after “developments in a number of previously disclosed legal matters” that started more than a decade ago.

The bank said it “would expect to report a loss as a consequence of this increase in reserves”.

Credit Suisse did not confirm which legal cases had forced it to put aside the extra cash.

The market notice comes nearly a month after a Bermuda court ruled against Credit Suisse in a long-running legal battle with the former Georgian prime minister Bidzina Ivanishvili, who it said was the victim of fraud committed by a former banker, Pascale Lescaudron.

Lescaudron was sentenced to five years in prison in 2018 after admitting to forging client signatures to divert money and make stock bets without their knowledge. The banker killed himself in 2020.

The court ruled in March that Ivanishvili and his family were due damages worth more than $500m (£385m).

Credit Suisse also told investors on Wednesday that its financial results would be knocked back by a further 200m CHF because of its exposure to Russia after the invasion of Ukraine, which has resulted in a swathe of sanctions against politicians, oligarchs and Russian businesses.

That is on top of a drop in investment banking activity, as fewer firms raise money on the financial markets and hold back from mergers and takeovers.

The first quarter loss extends a challenging period for the bank, which in February reported a 2bn CHF loss for the fourth quarter and faced scrutiny after the Credit Suisse secrets leak, which exposed the hidden wealth of clients involved in torture, drug trafficking, money laundering, corruption and other serious crimes over decades.

It followed an unprecedented year of controversies in which the bank became embroiled in the collapse of the supply chain finance firm Greensill Capital and the US hedge fund Archegos Capital, and was fined £350m over its role in a loan scandal in Mozambique.

The bank also lost its chairman, the former Lloyds chief executive António Horta-Osório, in January, after he twice broke Covid-19 regulations, and became the first big Swiss bank to face criminal charges in its home country after allegations it helped launder money on behalf of the Bulgarian mafia. It has denied the charges.


Kalyeena Makortoff Banking correspondent

The GuardianTramp

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