Credit Suisse CEO Suggested Bonus Reduction After Billion Dollar Loss
Credit Suisse CEO Tidjane Thiam ask board to reduce his bonus. He said the statement on Sunday. Previously, the Swiss financial group reported a worse than expected full-year net loss in 2015 on Thursday.
Wall Street Journal reported that last Thursday, Credit Suisse reported a larger than anticipated fourth quarter loss of 5.8 billion Swiss Franc ($5.8 billion). The loss occur as the Switzerland bank absorbed a massive impairment charge connected to its investment bank. Other causes are outflows in wealth management units and downbeat in investment banking.
In Thursday statement, Credit Suisse reported a fourth quarter loss of 2.4 billion Swiss francs ($2.38 billion) with a huge 3.8 billion Swiss franc ($3.8 billion) goodwill impairment which is related to the acquisition of Donaldson, Lufkin & Jenrette (DLJ)
As a result, Thiam said on Sunday asking the board to reduce his bonus, "I proposed to the board to markedly reduce my bonus."
The shares of Zurich-based bank fell 11% as investors are doubtful of cutting cost strategy from Thiam, which in his October statement regarding the target of 2018 mentioned a certain amount as profit target. However, Tidjane Thiam felt that his statement was misunderstood.
According to Reuters, Thiam said that he gave a profit range in his October statement as an illustration, "I never announced a 2018 goal of a 9-10 billion (Swiss francs) profit," he said. He added that setting profit targets for investment banking business is self destructive.
The former insurer in Prudential said that the challenge in the Switzerland second biggest bank is in its equities and fixed income business. According to him, the fixed income activities have suffered and pulling back several investment banking activities have taken its toll in the financial group. In order to regain increase more activities in investment banking, there were rumors that CEO planned to sell part of investment banking and capital market business to Wells Fargo.
He told CNBC regarding his belief, "It's important to be in investment banking." He also denied rumor about sale some business to Wells Fargo.
Credit Suisse was founded in 1856 in Zurich as Schweizerische Kreditanstalt, or Swiss Credit Institution. When it was founded, Its core business was to provide domestic fund for Switzerland railway system, in order to prevent French banks entering the Swiss railway project. Since then, Credit Suisse had a very important role in developing Swiss economy and financial system.
The full-year loss of Credit Suisse marked the second reported annual losses from European bank as Deutsche Bank AG has also reported a $7.2 billion annual loss. Credit Suisse posted a worse than expected loss in 2015 last Thursday, and its CEO suggested the board to cut his bonus for the loss.
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