Credit Suisse Group AG (ADR) (NYSE:CS) has announced it will be closing down its commodities trading business after a $2.6 billion fine to settle a tax investigation forced the company to make its biggest quarterly loss since 2008. In an interview on CNBC, the CEO, Brad Dougan, said that the company will now shift its focus to more profitable areas of business.
“We have actually announced the exit of our commodities business as well as continued evolution of our FX business and of our rates business. We think that will actually make as more capital efficient and take us to a place where we can make good returns, but also serve our customers very well,” said Brad Dougan.
Credit Suisse Group AG (ADR) (NYSE:CS)’s CEO has been under immense pressure, especially after admitting to tax evasion issues that saw the company slapped with a hefty $2.6 billion fine. The CEO during the interview stated that the settlement was reasonable considering they did not require any support from the government in order to fulfill their obligation.
The CEO remains confident that with the settlement of the legal dispute, as well as the exit of the commodity business, the company remains well positioned to perform better in the coming quarters. “I think it was actually an honorable settlement overall. It was very important to get this behind us, but I do feel with this behind us we’ve got a very clear path forward,” said Mr. Dougan.
He also emphasized the fact that the geopolitical issues experienced in the first half of the year should have a considerable effect heading into the third quarter. The company was forced to report a net loss of $779 million compared to a profit of 1.05 billion francs that was reported a year earlier attributed to the huge $2.6 billion charge it incurred.
With the exit from the commodity business, Credit Suisse Group AG (ADR) (NYSE:CS) expects to generate roughly $75 million in savings, as well as reduce its risk weight assets by $2 billion. Despite registering the huge loss, the second quarter remained solid, according to the CEO, the company adding $12 billion of net new assets highlighting huge support from customers.