Credit Suisse Group AG plans to eliminate an additional 2,000 jobs this year and deepen cuts at the investment bank, five months after Chief Executive Officer Tidjane Thiam announced an overhaul of the Swiss lender.
Under the plan, the bank plans to cut risk-weighted assets in global markets, which houses securities trading, to about $60 billion this year, compared with a previous target of about $83 billion, with the unit projected to post a loss in the first quarter, the company said in a statement Wednesday. The Zurich-based lender is targeting 6,000 job cuts this year, with gross savings of 1.7 billion francs ($1.7 billion).
Thiam is seeking to stem a slump in shares, down about 41 percent since he announced the company’s overhaul in October, as a drop in energy costs, record-low interest rates and cooling emerging-market growth eroded trading revenue. At Deutsche Bank AG, Europe’s largest investment bank, co-CEO John Cryan said last week that he doesn’t expect to post a profit this year.
“Our efforts aim at putting Credit Suisse in a position to generate capital and grow profitably in the medium and long term,” the bank said in the statement. “The measures we are taking to strengthen our capital base and reduce our operating costs will improve our resilience and flexibility going forward.”
Cost Targets
The bank said it’s targeting net cost savings of at least 3 billion francs by 2018, up from 2 billion francs, with while costs at global markets will be cut to 5.4 billion francs in that period from 6.6 billion francs at the end of last year.
At Credit Suisse, global markets performance had a “disappointing” fourth quarter, with “continued pressure” in the following three months. Bonuses for the businesses bankers were cut by about 35 percent in 2015, according to slides on Wednesday.
Credit Suisse said on Wednesday that equities will remain “a core area of focus” and that it will continue to build on cash, prime and equity capital markets businesses, while exiting most of the distressed credit, European securitized product trading and long-term illiquid funding.
The Swiss lender, which seeks to focus on wealth management as part of Thiam’s overhaul, “will emerge from this set of actions significantly stronger” in 2017, it said.
Bloomberg
