The Credit Suisse Group plunged to a record net loss of SFr2.1 billion ($1.44 billion) in the third quarter - dwarfing last year's SFr299 million deficit.
The figure, which was worse than analysts had feared, included a SFr1.4 billion loss at the group's struggling Winterthur insurance business.
Credit Suisse also announced on Thursday that it had appointed Leonhard Fischer, former head of investment bank Dresdner Kleinwort Wasserstein, as the new chief executive officer at Winterthur to turn around its flagging fortunes.
Switzerland's second largest financial group said it remained cautious for the fourth quarter but would return to "sound profitability" in 2003.
"We're putting measures in place in this quarter to return to profitability in 2003," said chief financial officer, Philip Ryan.
Analysts had expected a third-quarter net loss of close to SFr2 billion, up from a SFr579 million in the second quarter.
Other factors contributing to the record loss included a net operating loss of $425 million at Credit Suisse First Boston due to higher legacy costs, higher credit provisions and reduced revenues due to poor market conditions.
"Credit Suisse Group's third-quarter results were clearly unsatisfactory," said the company in a statement. "While the group's core businesses remain strong, our financial performance must improve.
"We are working together closely to enhance our bottom line, restore profitability in 2003 and build long-term value for the group's shareholders, clients and employees."
The CS Group has been hit by huge write-downs at Winterthur and has stepped in twice this year with cash injections totalling SFr3.7 billion to shore up its capital base.
Analysts appeared to think the worst was over for the troubled bank. "The figures were a bit disappointing," said Claude Zehnder of Zurich Cantonal Bank. "The outlook for 2003 is not too bad and this is the last blow-out."
The gap between Credit Suisse and its competitors was reinforced this week, when its main rival UBS reported bigger than expected third-quarter profits of SFr942 million.
Credit Suisse's current woes are largely the result of the failed "bancassurance" strategy initiated by outgoing chief executive, Lukas Mühlemann.
He bought Winterthur in the late 1990s expecting that the two business - banking and insurance - would support each other and lead to significant cost savings. The strategy backfired when the market collapsed, and Winterthur's capital base - heavily supported by equities - was wiped out.
The group's co-CEO, Oswald Grübel, said he had no plans to sell off Winterthur, at least before it had returned to profitability.
"We have to make Winterthur profitable and prove to the rest of the world that we can make it profitable."
Credit Suisse First Boston, the group's investment banking arm, has also been hamorraging money, as business has dried up.
CSFB recorded a net loss of $425 million in the third-quarter - wiping out a profit of $61 million in the previous three months. It had only just returned to the black after posting a $281 million loss in the same period last year.
Under chief executive, John Mack, CSFB has already cut costs by $2.4 billion, as well as nearly 2,000 jobs.
swissinfo with agencies
Credit Suisse third quarter
Credit Suisse reports a record quarterly net loss of SFr2.1 billion.
Leonhard Fischer is named as the new CEO at its Winterthur insurance arm.
Winterthur suffered a SFr1.4 billion loss in the third quarter.
The group said it would return to profitability in 2003.