Apr 16 - Credit Suisse's sharp drop in first-quarter net profit has raised questions about its investment banking strategy. But as Joanna Partridge reports the bank's European peers are expected to repeat the pattern.
Credit Suisse is being challenged on several fronts - a first quarter drop in profit of more than a third on the year is the result. Claims it's been helping wealthy Americans hide cash from the taxman is one problem - it recently set aside an extra $120 million for legal fees as a U.S. investigation was widened. Another issue is a 21% fall in bond-trading activities. That's knocked the bank's revenue and raised questions about its strategy of sticking with fixed income. Filippo Alloatti is from Hermes Credit. (SOUNDBITE) (English) Filippo Alloatti, Senior Research Analyst at Hermes Credit, saying: "I think they can do some fine tuning but I think the market needs to be a little bit more patient with Credit Suisse. Because they do have historic franchises in the United States." Credit Suisse's US rivals have seen similar falls as banks struggle with new regulations. And its European peers - including Barclays and Deutsche Bank - are likely to repeat the pattern when they report. But Chief Executive Brady Dougan is under pressure to consider a more radical restructuring. Some analysts say his investment banking strategy isn't sustainable given the bank's relatively small size and narrow focus.