Swiss bank Credit Suisse has reported a huge second-quarter loss as it struggles to overcome a major fine from US tax authorities. But the bank said restructuring its investment arm would help get it back on track.
Credit Suisse announced Tuesday it had booked a loss of 700 million Swiss francs ($779 million, 576 million euros) between April and June, its worst quarterly performance since the 2008 financial crisis.
The loss came after the lender settled a row with US tax authorities in May for a record $2.6 billion - the highest fine ever imposed in a US tax case. As part of the deal, Credit Suisse admitted to helping American citizens hide taxable income abroad.
In the same period last year, the lender had still managed to secure net profits of 1.05 billion francs despite the impending US tax investigation.
After paying the fine, the bank was left with a much weaker capital buffer, which analysts said was now one of the lowest among international lenders.
Shifting its focus
In a bid to rectify the situation, Credit Suisse said it would part with its capital-intensive commodity trading operations, following similar moves by US bank JPMorgan and Germany's Deutsche Bank.
CEO Brady Dougan said it was hard to tell to what extent the US fine had prompted potential customers to stay away from Credit Suisse, but admitted it was certainly a possibility.
Dougan, however, remained upbeat about the bank's investment banking operations, which he said had provided a strong sign of hope that Credit Suisse would soon recover from the blow from the hefty fine.
Credit Suisse has done very well in fixed-rate bond trading, the bank said, making it harder for critics to keep demanding a radical decrease in investment banking activities.
hg/cjc (dpa, Reuters)