(Bloomberg) -- Credit Suisse Group AG is poised to report its biggest quarterly loss since the collapse of Lehman Brothers Holdings Inc. afterbeing fined $2.6 billion for helping American clients evade taxes.
The bank will tomorrow post a loss of 701 million Swiss francs ($781 million), hurt by a 1.6 billion-franc charge linked to the fine, according to the average estimate of seven analysts surveyed by Bloomberg. By contrast, larger competitor UBS AG may log an 812 million-franc quarterly profit next week.
Credit Suisse’s loss would be the biggest since the fourth quarter of 2008. Uncertainty surrounding the outcome of the litigation and the bank’s guilty plea to criminal charges slowed the flow of client money into the wealth management unit. Both Zurich-based firms have sought to expand in that area as stiffer regulatory requirements introduced in the wake of Lehman’s collapse erode returns from investment banking.
“The insecurity before and after the guilty plea certainly didn’t make the business easier,” said Peter Stenz, a fund manager at Swisscanto Asset Management AG who helps manage 51.9 billion francs, including Credit Suisse shares.
Wealth management generated a third of Credit Suisse’s 25.9 billion francs in 2013 revenue. Inflows slowed to 6.3 billion Swiss francs in the second quarter, according to the average estimate of eight analysts surveyed by Bloomberg News. That compares with an average of 8.2 billion francs for the second quarter of the previous three years. UBS added about 13 billion francs of client money in the quarter, according to the average estimate of four analysts. The three-year average was 11.2 billion francs.
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