Credit Suisse looking at cutting around 5,000 jobs

video

Recession is here and about to get worse, correction is coming: Expert

The Wall Street Journal senior writer Jon Hilsenrath, Bank of America head of global research Ethan Harris, and International Assets Advisory CEO Ed Cofrancesco discuss the Fed’s next rate move on ‘The Claman Countdown.’

Credit Suisse is considering cutting around 5,000 jobs, about one position in 10, as part of a cost reduction drive at Switzerland's second-biggest bank, a source with direct knowledge of the matter told Reuters.

The scale of the potential job cuts underlines the challenge facing Credit Suisse and new chief executive Ulrich Koerner, who is seeking to put the bank back on an even keel after a string of scandals.

The bank declined to comment beyond repeating that it would give an update on its strategy review with its third-quarter earnings, saying that any reporting on outcomes was speculative.

Switzerland’s national flag flies below a logo of Swiss bank Credit Suisse at its headquarters at the Paradeplatz square in Zurich, July 31, 2019. REUTERS/Arnd Wiegmann/File Photo (REUTERS/Arnd Wiegmann/File Photo / Reuters Photos)

LAWMAKERS LAUNCH PROBE OF CREDIT SUISSE COMPLIANCE WITH RUSSIA SANCTIONS

Credit Suisse has dubbed 2022 a "transition" year with a change of guard, restructuring to curtail risk-taking in investment banking and bulking up wealth management.

The Zurich-based bank has dismissed speculation that it could be bought or broken up.

The discussions about job cuts are ongoing and the number of reductions could still change, the source said. Swiss newspaper Blick earlier reported that more than 3,000 jobs would be shed.

Credit Suisse has already said it will cut costs below 15.5 billion Swiss francs ($15.8 billion) in the medium term, versus an annualized 16.8 billion francs this year.

So far, it has not outlined job cuts.

Koerner, promoted to CEO just over a month ago, has been given the task of paring back investment banking and cutting more than $1 billion in costs to help the bank recover from a string of setbacks and scandals.

His strategic review, the second in less than a year, will evaluate options for the bank, while reaffirming its commitment to serving wealthy customers.

The Swiss lender is under increasing pressure to turn around the business and improve its financial resilience.

"Cutting cost is the easiest immediate step it can take. But it’s not a strategy," said Andreas Venditti, an analyst with Vontobel. "You can end up in a vicious circle, where jobs are cut, service declines and customers leave."

NEW YORK, NEW YORK – MARCH 29: A woman walks by the Credit Suisse offices on March 29, 2021 in New York City. Major global banks, including Credit Suisse, were hit with billions of dollars in losses after the US hedge fund Archegos Capital defaulted (Photo by Spencer Platt/Getty Images / Getty Images)

Venditti highlighted another conundrum: "Should restructuring costs, including from job cuts, run into the billions, the bank may also need to raise more capital."

Analysts at Deutsche Bank estimate that it may need to bolster capital by 4 billion Swiss francs to shore up its buffers and fund the revamp.

Koerner, 59, a restructuring expert, succeeded Thomas Gottstein as CEO in August after a tumultuous two years punctuated by huge losses, a rare court conviction for the bank in Switzerland and a 40% plunge in its shares.

Between April and June, the bank chalked up a 1.59 billion Swiss franc loss, as legal costs mounted. Its investment bank alone lost 1.12 billion Swiss francs before tax.

Bill Hwang, founder of Tiger Asia Management LLC, exits federal court in Newark, New Jersey, Wednesday, Dec. 12, 2012. Archegos owner Bill Hwang was charged with fraud and hit with SEC complaint in April 2022 (Emile Wamsteker/Bloomberg via Getty Imag (Emile Wamsteker/Bloomberg via Getty Images / Getty Images)

Twin hits – a $5.5 billion loss on the default of U.S. family office Archegos Capital Management and the shuttering of $10 billion of supply chain finance funds linked to collapsed British financier Greensill – have also beset the bank.

In June, Credit Suisse was also convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang in Switzerland's first criminal trial of one of its major banks. It is appealing against the conviction.

CLICK HERE TO READ MORE ON FOX BUSINESS 

In a sign that Credit Suisse expects an improvement in its fortunes, a senior executive told Reuters that it is still betting big on China and plans to launch a wealth business there next year.

The bank aims to start offering wealth management services in China next year on the back of securing full ownership of its local securities venture.

($1 = 0.9825 Swiss francs)

Source: Read Full Article