Credit Suisse to exit commodities trading business

Bank posts €576m net loss in second quarter as it settles with US authorities

Credit Suisse Group chief executive Brady Dougan at a press conference in Zurich yesterday. Photograph: Matthew Lloyd/Bloomberg

Credit Suisse Group chief executive Brady Dougan at a press conference in Zurich yesterday. Photograph: Matthew Lloyd/Bloomberg

Wed, Jul 23, 2014, 15:11

Credit Suisse said it would exit its subscale commodities trading business and further trim other parts of its investment bank, after posting a CHF700 million (€576 million) net loss in the second quarter.

The loss, which compared with a profit of CHF1.05 billin a year ago, was mainly due to a CHF1.6 billion charge the Swiss bank took to fund a $2.6 billion settlement with US authorities, after admitting in May that it had helped clients to evade taxes.

The US settlement resolved one of the largest and longest-standing uncertainties hanging over Switzerland’s second-largest bank by assets, but with the US fine paid, market attention has returned to the strategic direction of Credit Suisse’s investment bank.

Some analysts have called on the bank’s chief executive, Brady Dougan, to make radical changes to its fixed income, currencies and commodities operations (FICC), an area of banking which was once a big source of profits, but which has been hit by subdued markets and tougher regulations in the wake of the financial crisis.

Credit Suisse has resisted calls for a full-scale retreat, but said last autumn that it would slash its underperforming interest rates trading business by 40 per cent, and today joined the growing exodus of investment banks from commodities trading.

In recent months even some banks with big commodities arms, such as the Barclays in Britain, as well as a host of smaller players, such as the Swiss-based UBS, have made for the exit.