Credit Suisse posted a surprise fourth-quarter net loss after taking almost 1 billion Swiss francs ($1.1 billion) of charges to speed cost cutting and offload risky assets to meet stiffer capital rules.
"Our performance for the fourth quarter 2011 was disappointing," said Chief Executive Brady Dougan.
"It reflects both the adverse market conditions during the period and the impact of the measures we have taken to swiftly adapt our business to the evolving market and regulatory requirements."
Credit Suisse shares dropped over three per cent in early Thursday trading. Earlier it said it had got off to a good start to the year, with encouraging signs of more client activity and the bank's underlying return on equity around its 15 per cent target, when including the effect of cost and risk cut programmes.
The charge pushed Credit Suisse into a quarterly net loss of 637 million francs, compared to average analyst expectations for a profit of 430 million. Credit Suisse is making shareholders share the pain, proposing to nearly halve its dividend to 0.75 Swiss francs per share, from 1.30 francs in 2010.
"Earnings missed across all key divisions primarily due to weakness in fixed income trading, weak margins and inflows in wealth management, and higher costs and provisions particularly in the investment bank," Nomura analyst Jon Peace said.
Credit Suisse is leaving commercial mortgage-backed securities issuing and slashing areas such as long-dated interest rates and emerging market currency trading.
Dougan said Credit Suisse would meet a goal to slash risky assets by 80 billion francs in the first quarter, compared with its original target of by the end of 2012. The bank will exceed the target for the year-end by $39 billion.
The bank also said it is on track to cut costs by 2 billion francs by the end of next year. Mathers said no new job losses were planned on top of 3,500 already disclosed last year, which translates to roughly 7 percent of the bank's workforce.
The bank's total bonus pool will drop 41 percent to 3 billion francs, from 5 billion in 2010, Credit Suisse said.
Credit Suisse said it was doing everything possible to reach a settlement in a U.S. probe over helping wealthy Americans hide their money through hidden Swiss offshore accounts.
"We've obviously been working hard towards a resolution," Dougan told Reuters. "Obviously we'd like to try to resolve it as quickly as possible but its a complex issue so its hard to know when well be able to get resolution to it."
Rival Julius Baer (BAER.VX: Quote, Profile, Research, Stock Buzz) said on Monday it was prepared to pay a fine to escape the escalating crackdown, two weeks after Swiss private bank Wegelin was indicted by U.S. officials.
($1 = 0.9128 Swiss francs)
(Additional reporting by Catherine Bosley, Editing by David Cowell, Emma Thomasson and Mark Potter)
