Credit Suisse Group AG (CS) 2022 Q1 法說會逐字稿

Thank you, operator. Good morning, everybody. Thank you for joining us today. Before we begin, let me remind you of the important cautionary statements on Slides 2 and 3, including in relation to forward-looking statements, non-GAAP financial measures and Basel III disclosures.

For a detailed discussion of our results, I refer you to the Credit Suisse first quarter 2022 earnings release published this morning. Let me remind you that our first quarter '22 financial report and accompanying financial statements for the year will be published on or around May 5, 2022.

On the line with me today are Thomas Gottstein, our Group CEO; and David Mathers, our Group CFO. Thomas will give you an overview of our first quarter performance. And after his remarks, you'll have the opportunity to ask questions. Over to you, Thomas.

Thank you, Rob, and thank you all for joining our first quarter 2022 results presentation. Let me begin by addressing the broader economic and geopolitical environment.

Financial markets enter 2022, dealing with some of the highest inflation rates in the generation, putting significant pressure on central banks and weighing on the purchasing power of many of our fellow citizens. In addition, Russia's invasion of Ukraine has led to catastrophic humanitarian crisis.

Credit Suisse and its employees would like to express our sympathy and support towards the Ukrainian people as we continue to show our solidarity through support for aid groups and other organizations. The Ukrainian crisis has also had a significant impact on the global economy, financial markets and many businesses, including our own during the first quarter, as you will have seen in the reports from many of our global peers.

As I've said previously, in the context of our long-term strategic plan, the year 2022 is one of transition for us at Credit Suisse. We are determined to continue with the implementation of our strategy, as announced in November last year and remain focused on refining and reinvigorating our franchise consistent with our approved risk appetite.

The financial performance in the first quarter of 2022 highlights our work in progress and what more we need to do. As we disclosed last week, we reported a loss in the first quarter. This was partly a consequence of our decision to increase provisions relating to developments in a number of previously disclosed legacy legal matters.

This is in line with our proactive approach of resolving legacy litigation matters, many of which go back more than 1 decade. I started this process in 2010. Our results were also negatively impacted by Russia related losses of CHF 206 million.

As you will see in the slides, we have already made significant concrete progress in executing our strategy across our divisions with a simplified structure that went live on the 1st of January.

Before I turn to the presentation, as you have seen today, we have announced a series of appointments to the Executive Board as well as management changes. We are delighted to welcome Francesca McDonagh as incoming CEO of the EMEA region. Edwin Low, as CEO of the Asia Pacific region; and Marcus Diethelm, as General Counsel. They will take up their roles in the coming weeks and months.

David Mathers, who has served as Chief Financial Officer since 2010 has indicated his wish to seek alternative opportunities outside of Credit Suisse. While I have accepted his request with regret, I look forward to working with him over the coming months until a successor is found. And on a personal note, I would like to add that I will not only miss him as a competent CFO, but also as a friend and colleague, but it's good to know that for the next few quarters, you're still with us, David.

I would also like to thank Romeo and Helman for their service to the bank over several decades, and I'm very pleased that Helman will serve as senior adviser to me focusing on core clients around the APAC region as well as serving as our Asia Advisory Council member.

The determined delivery of our strategy over the coming quarters is the absolute focus of the Board of Directors of the Executive Board and all our employees. With that, let me turn to the slides, starting with our key messages from the first quarter.

Slide 4. We recorded a CHF 0.4 billion pretax loss in the first quarter as our reported results were negatively impacted by CHF 0.7 billion of legal provisions, by CHF 0.2 billion of Russia-related losses and by CHF 0.4 billion market value losses related to our stake in all funds. These were offset somewhat by real estate gains and the net release of provisions for credit losses relating to our (inaudible). On an adjusted basis, we reported pretax income of CHF 0.3 billion and this includes the CHF 0.2 billion of Russia-related losses.

Overall, we saw net new revenues -- sorry, overall, we saw net revenues declined year-on-year, mainly due to a particularly strong comparable in the first quarter of 2021 and especially in the Investment Bank and Wealth Management. We also experienced significant industry-wide headwinds in the form of more challenging market conditions due to higher inflation and interest rates as well as Russia's invasion of Ukraine impacting a number of business areas.

In the first quarter, we reduced our Russia-related net credit exposure by 56% and we continue to make further progress in exposure reduction. We have continued to run our business with a strong capital base. Our CET1 ratio was 13.8% in the first quarter of 2022 compared to 12.2% 1 year ago. Our CET1 leverage ratio was 4.3%, also up from prior year levels.

We stand by our medium-term guidance of a CET1 ratio of at least 14% pre-Basel III reforms and a CET1 leverage ratio of around 4.5%. While our performance has been impacted by significant headwinds, our focus remains on executing the strategy we set out last year. I will go into details a bit later.

But as you can see from the middle of the slide, we have made considerable progress on key aspects of our integrated strategy. Regarding risk, the strengthening of both our first and second lines of defense are on track. We are confident that our strengthened risk culture should help us build a stronger and customer-centric bank that puts risk management at the core to deliver sustainable growth and value for investors, clients and colleagues.

Next slide, please. Here you can see some of the factors affecting our reported and adjusted results in the quarter. Our adjusted results were characterized by reduced client activity and capital markets issuance in volatile market conditions. They also reflect the cumulative reduction in risk appetite in 2021 as well as in the first quarter 2022, the impact of the flattening yield curve on Corporate Center treasury results and increased cash accruals for compensation due to the normalized deferral level and not due to higher bonuses, just to be clear.

Let me turn now to the regional breakdown. This is on Page 6. In terms of adjusted pretax income and net revenues, Wealth Management had a challenging start to the year with adjusted PTI adversely impacted by lower transaction activity and further reduced lending volumes. The results were also impacted by Russia-related effects and APAC Financing Group mark-to-market losses which combined, were approximately $130 million.

Still, we increased investments, including in talent and saw positive net new assets across regions, reflecting our client franchise strength. Our Investment Bank results were impacted by our continued efforts towards our planned exit from Prime Services, the slowdown in Capital Markets as well as the Russia-related impact on our GTS results. GTS stands for Global Trading Solutions and is our joint venture between the Investment Bank and Wealth Management.

It is important to remember that our franchise mix in investment banking which particularly benefited us in the first quarter of 2021 was less supportive in the recent environment, given our much more limited exposure to macro interest rate trading and commodities, sectors that performed particularly well in the first quarter.

Despite this effect, the IB posted solid performances across equity derivatives, securitized products and M&A. The advisory pipeline was not only up quarter-on-quarter, but also year-on-year. Our Swiss Bank had a good performance with stable net revenues from higher recurring commissions and fees and strong net new assets from the institutional client business.

Asset Management had lower pretax income and softer revenues due to the market environment and reduced activity levels. However, recurring management fees were broadly stable with higher investment and partnership income.

Next slide, please. This is an important slide because it describes our derisking measures over the last 12 months. We made a number of decisive actions throughout 2021 as well as in the first quarter to strengthen risk and compliance teams, systems and processes. As you know, we underwent a comprehensive risk review across the entire group, which was completed in the fourth quarter last year. Our derisking measures have improved our risk profile, but also have negatively impacted our top line in the short term. For example, the derisking measures in Wealth Management that you see on the left of the slide, led to a reduction of roughly CHF 25 million in net revenues during the first quarter. In the Investment Bank, de-risking led to approximately CHF 250 million in reduced revenues.

Notwithstanding the expected impact from our planned exit from the remaining part of Prime, our growth ambitions are fully aligned with our risk appetite. And as you can see on this slide, sorry, if we can quickly go back, our group credit portfolio is down 9% year-on-year, including 17% reduction of noninvestment-grade loans. And in certain areas, we were down over 20%.

Slide 8, please. Strengthening risk management and addressing legacy issues remain a focus even as we implement our growth strategy. Here, you see selected updates of our progress on risk and compliance topics and our proactive approach to resolving litigation cases, (inaudible) by settlement. And you can see, we settled 12 major litigation cases since 2020 since I started as Group CEO as well as the dismissal of 80 cases since 2020.

Next slide, please. We are focused on refining and reinvigorating our franchise in order to drive forward our vision for Credit Suisse. We are convinced it is the right strategy even in the midst of volatile markets and economic conditions. Please allow me to give you just a few examples of our determined execution of the strategy.

We have achieved USD 2.5 billion reduction in allocated capital to the Investment Bank since the fourth quarter of 2020, which amounts to 82% of our ambition of more than USD 3 billion by the end of 2022. We launched an outsourcing agreement on April 1, 2022, to generate procurement savings and aim to step up synergies from unified operating platforms, technology platforms, and the divisions in the coming quarters.

This should help us meet our ambition of CHF 1 billion to CHF 1.5 billion in structural cost savings per annum by 2024 to invest in our growth ambitions. In Wealth Management and Private Banking Switzerland, we achieved mandate penetration of approximately 33% in the first quarter near our 33% to 35% ambition range.

In the Investment Bank, we reached an 84% reduction in prime services balances since the first quarter of 2021, with our goal of a full Prime Services exit by the end of 2022 at the latest, which should allow us to generate significant cost savings. We added approximately 50 managing directors in the Investment Bank, underscoring our commitment to attract talent.

In our Swiss Bank, we reached 125,000 clients for our digital offering CSX as of the first quarter 2022 with an ambition to reach 200,000 by year-end. Let me now discuss each division in a little bit more detail.

Next page, please. Starting with Wealth Management. We aim to progressively deploy resources in our Wealth Management division under the new leadership of Francesco De Ferrari to accelerate growth. We have made meaningful progress in laying the foundations for integrated wealth management and defined and initiated 10 execution priorities that reflect the changing geopolitical climate. These include client segmentations, priority markets, products and solutions, simplification and people.

We have also started execution of our initiative road map. Examples include the exit of private banking activities in Sub-Sahara Africa markets, excluding South Africa and accelerated digital outreach in the core high net worth individual segment as well as investing in 50 relationship managers mainly in Asia Pacific, Switzerland and EMEA.

I would also point out that higher U.S. dollar interest rates should provide benefits to the bank through incremental net interest income of an estimated CHF 550 million through 2023. As with each of our divisional slides, you can see at the bottom of the page, our ambitions as we declared them as per 2024.

Next page, please. Christian Meissner and his team have made continued progress reshaping the Investment Bank. And on this page, you see some of our specific actions. We have released capital from Prime and derisked the franchise. We have increased connectivity to wealth management to build a global franchise.

We are investing in the capital-light investment banking and capital markets business. In the first quarter, we grew market share in both EMEA and APAC, the top 5 market positions in both. We are driving growth in our market-leading credit and securitized products businesses.

Next page, please. Andre Helfenstein, Swiss business, has been a resounding success and is an anchor for our transformative agenda. The division continues to focus on growing our market-leading mid and upmarket franchises in private, corporate and institutional banking. We have seen strong growth in our digital offering, notably CSX, and we are simplifying and digitalizing front-to-back processes. We are well positioned to capitalize on the post-COVID normalization in credit cards, FX and in leasing.

Next page, please. Under the leadership of Ulrich Korner, we have also made solid progress executing our ambitious strategy in asset management with a focus on talent and technology. We have strengthened and simplified the organization with a number of key leadership hires.

We joined the Net-Zero Asset Managers initiative, underscoring the manner in which our group-wide sustainability strategy is embedded across divisions and in particular, in asset management. And we have strengthened risk management and our control environment in this division.

Next page, please. Our investments in technology and engineering are a significant focus of our ambition to simplify our business model, drive digitalization and maximize our client experience. We have started implementing the strategy in our recently established Chief Technology and Operations Organization, CTOO, under the leadership of Joanne Hannaford. We recently announced the CTOO organization and leadership team and are focusing on agility, digital transformation and productivity across our 3 group strategic pillars. Many of the underlying efforts have already started.

Next slide, please. Credit Suisse continues to emphasize the importance of sustainability as a core element of our value proposition for our clients, shareholders, employees and the society as a whole. We've made significant progress executing our 5-pillar strategy in 2021 and many of our objectives and achievements are outlined in our 2021 Sustainability Report.

Let me outline some of the achievements here. We reached sustainable assets under management of CHF 144 billion at the end of the first quarter, up from CHF 118 billion in the first quarter of 2021. We also increased sustainable AUM penetration as a share of total assets under management. We are proud to have earned the Sustainability Bond of the Year Sovereign award for our role as sole structurer and arranger of the Blue Bond for The Nature Conservancy.

On the right side of this page, you see our progress and our way forward. Emma Crystal, our new Chief Sustainability Officer, is driving these efforts in close collaboration with all 4 divisions. We remain committed to supporting our clients transition and expanding our sustainable investment and financing offering as we make further progress toward our ambition of providing at least CHF 300 billion in sustainable financing by 2030. This is over 10 years since 2021. So it's CHF 30 billion per year. And we have already announced at the end of last year that we are at CHF 44 billion.

Slide 20 -- sorry, Slide 16, which is the concluding remarks page. So allow me to continue by reiterating our 2022 priorities that you see on this page. First is to execute with discipline, the detailed group strategy and the 3-year financial plan, which we presented at our Investor Day on the fourth of November last year.

Together with my colleagues on the ESP, we share a clear commitment to implementing the new strategy of strengthening the core, simplifying the organization and investing for growth. Second, we'll continue to improve risk and compliance with an emphasis on risk culture whilst not losing our client focus and the entrepreneurial spirit that has been the hallmark of Credit Suisse since its foundation more than 165 years ago. Third, we aim to reestablish franchise momentum grounded in a positive basis for growth in our 4 divisions and 4 regions and supported by a disciplined approach to costs and investments.

With that, let me turn to Rob to begin our Q&A.

Great. Thank you, Thomas. Shall we start with the first question, operator?

(Operator Instructions) Your first question today comes from the line of Oliver Hirt from Reuters.

I would have 3 questions. The first one is on revenues. Revenues are down 44% in Wealth Management and 50% in Investment Banking. I still struggle to understand why this is down so much, given that UBS, which has a similar business model is up 8% for the whole group in Q1?

Secondly, Mr. Gottstein, you mentioned in mid-March that business was relatively solid in the first 2 months of the quarter. And now it's as we've seen a loss and a huge drop in revenues. Can you kind of explain what happens in between. And finally, you mentioned that you were aiming for a net profit in the full year 2022. Is this still the case?

Yes. So let me start and maybe, David, if you want to add anything, please do so. So clearly, the comparison with last year is only partially relevant because you have to also look at some of the extraordinary factors that impacted revenues both last year and this year.

Secondly, you have to really also look at the quarter-on-quarter improvement. And thirdly, you have to look at some of the different business mixes. If you compare ourselves with certain competitors. So for example, in Wealth Management, we do not have a U.S. business, which was largely protected from some of the impacts we've seen in the rest of the world in particular, also Asia, which was very weak, not only for us but also others and also a different business mix in the Investment Bank.

The Investment Bank, first of all, we have an 80% reduction, as I said, in our Prime Services business, which directly impacted our equities business to a very material amount but also, unlike others, Credit Suisse is much more focused in its Investment Bank on credit and capital markets, the 2 areas that were the strongest in Q1 2021 and the weakest in Q1 2022.

But if you look at it on the first page of our press release, for example, on a quarter-on-quarter basis, you can see that net revenues on a quarter-on-quarter basis are actually up 4%. As I said already at the full year results and then again at the Morgan Stanley conference -- the fourth quarter 2021 was clearly a quarter where Credit Suisse had come in terms of risk reduction and lending reduction and new business almost to a standstill. And this machine had to start -- had to restart. We had a decent start in January, February.

But clearly, in March, we had 2 effects. We had the effects of the Russia invasion in Ukraine, and we had the effects of the legal provisions, which impacted our pretax income by CHF 700 million. And thirdly, the net profit, we continue to forecast the net profit for the full year 2022, despite the loss in the first quarter. So that's clearly still our expectation, yes. I don't know whether you want to add anything, David?

Well, I think, Thomas, you summarized it very perfect well. I completely agree with you. But I mean I think, Oliver, just to help a bit. I mean I think if we look back at what we actually said in the annual report, which came out in the second week of March.

We were very clear then that we said we've seen a reversion to lower pre-pandemic levels of business activity compared to the exceptional strength we saw in the first quarter '21. And I think as Thomas has already said, there's obviously been the adverse impact of the cumulative risk reduction measures for the whole of 2021, and that obviously includes Prime. And I think we did note there's CHF 173 million lower revenues due to the Prime exit compared to a year ago.

And last but not least, you have obviously the factors that Thomas has referred to in terms of the impact through the business in March. And you should remember that the wealth business in Credit Suisse, which I think was a particular target for your question, also includes their share of the GTS joint venture. So they include, therefore, their share of those normalization effects and their share of the impact of Russia invasion of Ukraine. So that's why basically you see a greater impact.

And last but not least, I don't think your question was particularly about the Investment Bank, but let me help. I mean, I think it's fair to say, and I actually said this on the Newswire call this morning, that the trading environment, which we had in the first quarter a year ago, was extremely favorable for the mix of businesses we have, particularly around securitized products, credit and leverage finance.

If you look back at the interest rates at that point, it was a very favorable trading environment. What we're seeing now is a very sharp increase at the short end 2, 3, 4, 5 level and then a flattening of the curve. That actually is fine if you have a large rates business, which some of our competitors do, but we obviously exited from rates back in 2015, which was the right decision. It wasn't making as much money and for 7 years, there hasn't been much of an issue.

But clearly, if you have a different business mix, you'll have different results in response to that. And I think it is particularly a particular change between the first quarter of last year and the first quarter of this year due to those -- due to what -- you've seen such a radical change in the monetary environment. I think it's clear that central banks may say it was perhaps a little tardy in terms of reacting to the inflation signals last year, but quite clearly at this point, they've really moved very fast to actually respond to them.

Our next question today comes from the line of Christian Kolbe of Blake.

I've got 2 questions. The first one is you reported the inflow of net new money was very low in the first quarter 2022 when you compare to the first quarter 2021. There was a huge decline, how dramatic is this decline for Credit Suisse.

And second question is there's a lot of person changes on the top of Credit Suisse. Mr. Gottstein, was it at any time also discussion that you could withdraw from your post or your job as CEO?

Thank you, Christian. So net new assets, as you rightly point out, are down compared to last year, but they are up compared to the fourth quarter significantly and are positive in each of the 4 regions, which given where we are, given the overall market environment, is actually a decent outcome, but it's clearly not where we want to be on a mid- to long-term basis.

But the positive thing is that we had positive inflows in all 4 regions in Wealth Management. In particular, we had good net new assets in Switzerland, in Asia and in our external asset manager business. And our mid- to long-term target clearly is to get into the 3% to 5% net new asset growth per year. I've always said that, for me, the more important metric than net new assets is actually the growth of client business volume, which is the result of 3 elements, which is assets under management, its lending volume, and asset under custody.

And if you drive this metric, client business volume, over the mid- to long term, you will grow your Wealth Management revenues across all 3 elements, which are net interest income, recurring and transactional revenues. And that continues to be my main focus that we grow client business volume in all 4 regions of Wealth Management.

As far as the personnel changes are concerned, you're absolutely right that we have made these changes now on the back of succession planning. David Mathers has been 12 years, our group CFO. Romeo Cerutti has been over 10 years, our General Counsel and Helman has been over 8 years, our CEO of APAC. I'm obviously delighted to have David staying on until we found a successor. I'm delighted that Helman is staying on with the bank. And we -- I'm delighted also that we have managed to hire Francesca McDonagh from Bank of Ireland as our new CEO for the EMEA region, a position that we already announced in November, we want to fill and she will add a lot of experience to the Executive Board.

As far as I'm concerned, I have a clear mandate and my mandate is to execute the strategy, the 3-year plan for 2024 and I've only been 2 years on this Executive Board -- sorry, only 2 years in the CEO role. I joined 3 weeks before COVID, and I'm now 100% focused together with the rest of the Executive Board to execute on our strategic plan as for 2024.

We will now take our next question, which comes from the line of Steve Slater of IFR.

I've got 2 questions on the investment bank for me. Notwithstanding the difficult environment and business mix that you talked about, it does appear that Credit Suisse is really in danger of losing its place at the top table of investment banks.

So I just wanted to get a feel for what you envisage could it Swiss Investment Bank being? Do you still expect it to be the top European bank or are you giving up on those ambitions? And how do you keep the U.S. business, in particular, happy and firing on all cylinders?

And related to that, the Investment Bank expenses were up 6%. Are you having to pay people more to stay or join? Can you give a little bit of color on why those expenses grow so much, please?

Yes. Let me take the first question, and David will take the second question. So look, our clear vision for the Investment Bank is to be a more asset-light, higher returning division. And our goal is to get to a return on capital for that division of 12% by 2024. In order to get there, we have decided to take some tough decision on some balance sheet-heavy businesses like Prime Services, like the Corporate Bank, or like certainly emerging markets GTS businesses, which also attract capital and which are outside our risk appetite.

And as part of this move towards a more asset-light business model in the investment bank, we want to achieve this 12%. This is our goal. And this is much more important to us than any form of market share or being in a league table of being the #1 Investment Bank of all non-U.S. Investment Bank or whatever. This is not our stated goal.

Now clearly, there are areas where we want to further gain market shares. And these are the asset-light businesses like M&A, like capital markets. We also have some other franchises like our sponsor business, like our securitized products and credit businesses where we are a leading firm, and we want to continue to be a leading firm.

And in some of these areas, we have actually gained market share already now in the first quarter, if you look in EMEA and in Asia in M&A capital markets, we actually have attained top 5 positions, and that is important to us. But clearly, the U.S. market is roughly 2/3 -- between 60% -- 60% or 2/3 of the global M&A and capital markets wallet. So you have to continue to be strong in the U.S. if you want to be strong globally, and a lot of transactions are Transatlantic or Transpacific.

And therefore, you need to have strong U.S. capabilities in M&A, but also in U.S. listings of Asian or European companies, and that's why you need to have a certain strength also in the U.S. in these markets. And maybe with that, I'll hand over to you, David, for the IB expenses.

Steve, as you say, the IB expenses were CHF 2.077 billion this first quarter. So that was 6% higher than in the first quarter of 2021. Three reasons. Firstly, as we said on the analyst call, a year ago in response to the Archegos and Greensill matters, we've reduced both the overall variable compensation, but also the amount of cash paid i.e., we increased the deferral.

That was the right thing to do in the circumstances, but it's not sustainable for the long term. And we said this in November, and I repeated it in February that we intended to move towards the deferral table in line with the average for our peer European banks. What does that mean? It means that essentially you've got an increase in the deferrals from what we deferred from last year, but more importantly, an increase in the actual cash value we're actually accruing for in the first quarter.

So that's the biggest impact in terms of this -- by the way, I'm not making any statement there about the full year EV. It's too early in the year to know exactly what the market is going to do anything like that. Frankly, I've assume something roughly similar to where we were on our quarter of last year's bonuses plus STP. But I think that's not a commitment, it's just where we are in terms of the mass. So that's the first factor.

The second factor is, as a group, we do have a remediation program to deal with some of the issues that were clearly underlying the problems we had last year, and we're investing in our risk and our compliance structure. And we're also investing in some of our key IT infrastructure as well. And that's both a group-wide and IV specific set of investments.

The third factor, really to Thomas' point, we did see some departures in the second quarter of last year. And as you may have seen from the media coverage, we've actually made a significant number of senior banker hires so far this year, which I think our firms and supports what Thomas has just said.

Your next question today comes from the line of Thomas Paul of AWP.

Yes. I would like to ask about if you could give -- shed some light on the provisions that you made for legal matters not a bit or more does it concern this less (inaudible) cases? And are there further provisions for the Greensill matter as well. Can you say a little bit more about this?

And the second question is just about the Russia business. Did you decide on your presence in Russia, it was, I think, for some while -- it was in question if you oppose it there.

Let me take this -- take both questions, really because I think, firstly, I'll just repeat what I said on the analyst call. It's not appropriate for me to really comment on leak issues, which are clearly live at this point in terms of subdued in terms of their process. So I can stick only to more general comments.

But we have tried to be as helpful as possible. You may recall the announcement we put out a week before last in which we said that the increase in provisions of CHF 600 million related to issues, which were all long-standing originating more than a decade ago. So I think you can definitively rule out any change in the Greensill provisions on the basis of what we actually said at that point, just to sort of address that point.

In terms of what it did relate to, as I said, it relates to a number of legacy matters dating back in origin, at least a decade. I'm not really going to expand beyond that. There were developments in the RMBS book and elsewhere in the book, which we've actually responded to. I think we are very committed to actually closing off what is a significant and long-standing book of cases. I mean the RMBS runs date back to 2005, 2006, 2007, which is 15 years ago plus.

In the last 2 years, since Thomas took over as CEO, we've actually achieved dismissal of more than 80 cases, and we've settled 12 significant civil cases as well. And I think you should see these provisions really as part of that process, but they do reflect developments during the quarter. But I think that's as far as I can go, given the sensitivity of the issues at this point.

I think the second one in terms of Russia, I think we were very clear in terms of this basically. We have not made any new investments in our Russian subsidiary since the invasion back on February 24. We clearly are looking to help our clients wind down their positions in Russia. We clearly support our staff in Russia, but clearly, a number of roles have actually been moved out of Russia. And Credit Suisse is committed to enforcing the sanctions that have been imposed both by the Swiss governments, the European governments, the U.S. government and the U.K. government.

Okay. But you're upholding the presence is, I think, 125 employees.

If I can add to that. I mean, most of these employees are not working in the office right now. They are basically on a paid leave. And we are obviously want to not yet take any decision on releasing employees, but this is something that we are clearly winding down the operations there like winding down the propositions as David explained. But at this stage, we still have -- like everybody else, by the way, our legal entity there. We still have our license there, but we have not at all invested in the business.

And quite the contrary, we are basically winding down our positions in Russia. And when we talk about our Russia business, for example, in the context of Wealth Management, like the 4% we mentioned in March and that we reiterated today have now gone down a little bit to more towards the 3%. This is for all Russian clients globally.

So this includes Russian clients in Switzerland, Russian clients in the U.K., in the Middle East. So this is a global number and does not relate only to Russian clients in Russia.

Your next question today comes from the line of (inaudible) of CH Media.

I have 2 questions. Thank you. The first is about this GTS which has been established as far as I remember, back in 2020. Now it is responsible for that huge drop in earnings in the wealth management business. Maybe you can try to explain me again the -- well, the reason for that.

The second is I have the impression that looking at these litigations and many of them are dating back 10 years or even more. I have the impression that this is a proof of lacking leadership in the Credit Suisse company. I would like you to comment on this.

If I take the first point, just some cover of GTS. So just to be clear, the original joint venture was actually established back in late 2017, not 2020. I think the reason you might be referring to 2020 is we actually expanded it in 2020 to actually include Asia. So it's -- it's been around for, I guess, about 4 years now.

The joint venture is very successful at actually supporting collaboration across our wealth And investment banking businesses. It enables us to actually offer a much broader range of products and services from structured notes and products like that through to much more complex bespoke transactions. And the results from that are then shared between the Wealth Management and the Investment Banking division. So that's what GTS actually does.

In terms of the first quarter performance, what we actually saw in the first quarter was about 3 factors. Firstly, a year ago, it was an extremely strong business because the market bounced favorably as I said already. And the GTS business had an exceptionally strong first quarter in 2021. And then in Venice, conditions became more difficult to that. But in terms of the comparison, that drives it. Secondly, A number of the counterparty rate issues actually sit in GTS. So to the extent we've taken provisions against that, which we have done is on a prudent basis, those flow into GTS and then there's split between the Investment Bank and Wealth Management businesses.

And thirdly, I think we did -- we have said we're reducing some of our exposure to emerging markets at the Investor Day last week, last November, and that has had some impact in terms of our emerging market business in GTS. But the real issue essentially is comparison because a year ago was a very, very strong period. You add Russia to that even though the equity derivatives business has had a very strong first quarter, it's still not as good as it was in the first quarter of 2021, which was a record.

Credit Suisse looked -- then you would say Credit Suisse looked far better back in '20 in first quarter 2021 than it actually was, and now it looks worse.

No, that's not what I said. What I said is that the underlying performance of our businesses in the first quarter of '21 were extremely strong. We had a lot of business momentum and it was a very favorable operating environment.

Over the course of the 12 months, we've obviously, as we talked about, reduced our risk exposure, which I think is a proper response to the Archegos and Greensill situation. but you have a completely different macroeconomic environment in the first quarter of 2022 than in '21. In the first quarter of '21, you had a steepening curve.

If you actually look at the rate moves that happened since then, you've seen a huge step-up in the -- in rates in both the short and the medium term.

As far as litigation is concerned, Daniel, it's very clear that you have -- if you go back the last 15 years or so and you look at the cases we had both in IV and in Wealth Management, there are some significant parts that are worth mentioning. So on the IV side, for example, it's the RMBS bucket, if you want.

And I think I saw somewhere that we had, in total, 80 civil cases with a total litigation amount of $91 billion. That is from the financial crisis. The firm has been working through this over the last 12, 15 years, I cannot comment on the litigation strategy then. All I can say is that since I'm Group CEO, I've been focused on proactively working through the rest that we still have, and we have made very good progress since 2020.

There were other areas in the industry like LIBOR and FX, where Credit Suisse was actually much less involved than others. But this is clear that a global Investment Bank always have this type of legacy cases. And the legal teams have been working through some of these cases very successfully.

On Wealth Management, clearly, the big case was in 2014 with the U.S. authorities, which was dealt with in 2014 and that was really the main case there in the past. And I think the management at the time dealt with that issue. And clearly, there are always some cases that are coming up. Some of them you have mentioned that we have to deal with.

And I think that Romeo Cerutti and the legal team have done a very solid job over the last 10 years. But as always, when you think about succession planning on an Executive Board, when somebody has reached 10 years plus on the Executive Board, it's probably time also then to start talking about succession planning, and that was both the case with David with now 12 years or with Romeo. So that is clearly what is driving this.

And I want to say that the firm continues to be focused on proactively addressing the legacy cases. And the policy has not changed with the change of General Counsel.

Thank you all for your time today and for joining us. If you have any follow-up questions, please do contact the media relations team in the usual way.

That concludes today's media conference call. A recording of the presentation will be available about 2 hours after the event on the Credit Suisse website. Thank you for joining today's call. You may all disconnect.