Switzerland's second-biggest bank, Credit Suisse, has announced a second quarter net loss of SFr579 million ($386.8 million).
The loss - which comes after CS reported a net profit of SFr368 million for the first quarter - was worse than expected.
In a statement released on Wednesday, Credit Suisse said lower income in its loss-making Winterthur insurance business was the main reason for the fall.
Winterthur made a net operating loss in the second quarter of SFr490 million.
The bank described the results as "unsatisfactory", but said it remained committed to the insurance company.
New measures for Winterthur
Credit Suisse's Chief Executive Officer, Lukas Mühlemann, said the bank would implement additional measures to strengthen Winterthur.
"We will take measures to improve profitability," Mühlemann told a press conference. "Portfolio management will be reorganised."
Credit Suisse bought Winterthur in 1997, as part of a strategy to offer combined banking and insurance services.
But Mühlemann insisted that, overall, Credit Suisse was showing healthy and sustained growth, with private banking and Swiss corporate and retail banking units recording "solid earnings given the challenging market conditions".
Nevertheless, financial analysts remain unconvinced that the difficulties with Winterthur are Credit Suisse's only problems.
"These figures are a real disappointment," said David Hussey, senior European banks analyst at Barclays.
"Even across [Credit Suisse's] other divisions, the old stalwarts of private and retail banking didn't look too good," Hussey told swissinfo.
Hussey pointed out that other companies had managed to weather the drop in the equity market without suffering the losses shown by Credit Suisse.
"I think management haven't kept a tight rein on the underlying operating profitability of the business," he explained.
"A lot of investors are now saying they should never have bought Winterthur. Strategically you could blow massive holes in their strategy."
UBS looks stronger
Credit Suisse's net loss for the first half of the year stands at SFr211 million, in marked contrast to the bank's biggest rival, UBS, which on Tuesday reported a second quarter net profit of SFr1.331 billion ($890.3 million) - down four per cent on the same period last year.
Comparing the two companies, Hussey suggested that Credit Suisse might even be a target for takeover.
"It does look like a consolidation target at some point," he said. "It's a weakened business compared to UBS, and clearly any consolidation would be well received by the markets."
But Credit Suisse's CEO Lukas Mühlemann dismissed any talk of a merger with UBS.
"Neither the country nor the two banks would be well served," Mühlemann told swissinfo. "We would have a market concentration in Switzerland that would be very unhealthy."
Credit Suisse now says its top priority is to restore the ailing Winterthur to profitability.
But despite a cash injection of SFr1.7 billion already in 2002, the company is expected to lose money again in the third and fourth quarters of the year.
by Imogen Foulkes
Winterthur is proving a cash drain for CS, which bought the insurer in 1997.
The bank is blaming weak equity markets for the fall in profits.
UBS is weathering the economic downturn better than its rival.
CS boss Lukas Mühlemann plans to step down as chairman in 2003, but will stay on as CEO.
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