Credit Suisse boss defends bank's role in collapsed trading product

Dianna Christensen
February 15, 2018

Credit Suisse Asia-Pacific posted adjusted pre-tax income of 792 million Swiss francs (US$849 million) for 2017, 1.8 per cent higher than the same period a year ago, as a strong performance in its wealth management division made up for a loss of 28 million Swiss francs in its markets division.

Credit Suisse said it will buy back the VelocityShares Daily Inverse VIX Short-Term ETN, known by its trading symbol XIV.

But the meltdown of one of the bank's volatility products last week and two recent US lawsuits over activities before and just after Thiam took charge have raised questions about how far his strategy has taken hold.

Revenue is Asia's markets unit - trading - surged 15 percent in the first six weeks of this year, while income in its overall markets arm climbed by 10 percent, the bank said.

Thiam was positive about business in the first few weeks of 2018.

The CEO said that 2017 was a crucial year of delivery in the bank's three-year restructuring plan after 2016, which was a year of deep and radical reorganization and restructuring.

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Speaking to the media on Wednesday, Helman Sitohang, Credit Suisse's chief executive officer for Asia-Pacific, said that he could not give any further details.

"We've been through a lot with this thing".

"The decisive point in our view is the very strong outlook statement" about the start of this year, said Andreas Brun, an analyst at Mirabaud in Zurich with a hold recommendation on the stock.

"They're on the right track", Thomas Jaeger, a senior portfolio manager at Mirabaud Asset Management, said ahead of the results. On a pre-tax basis, it was the bank's first year in the black since Thiam launched the turnaround plan in 2015.

Credit Suisse says it narrowed its fourth-quarter loss as pre-tax income swung into the black, while the Swiss bank predicted a positive impact from the US tax reform in the future.

The group proposed a reduced dividend of 0.25 francs per share.

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