Credit Suisse will cut as many as 2,000 additional jobs, as it looks to accelerate the cost cutting programme it put in place earlier this year. The jobs will be cut in Credit Suisse’s global markets business.
The cuts are part of a programme of cuts that aims to reduce costs at the bank by 800 million Swiss francs (£580m; $820m) per year. 4,000 jobs were already set to be cut as part of a major reorganisation of the bank.
The job cuts were announced in a statement from Credit Suisse CEO Tidjane Thiam, which cited “challenging” market conditions and a desire to make the bank’s position more “resilient” as reasons for the acceleration in cost cuts.
Here’s what the bank’s statement said: “We are taking action to lower the cost base of Global Markets by reducing headcount by 2,000. This will drive a decline in the Global Markets’ cost base from USD 6.6 billion to USD 5.4 billion by end-2018.”
Along with the job cuts, Credit Suisse announced several other measures to be put in place to cut costs. Here are some of the highlights:
- The bank wants to cut costs by “at least” 4.3 billion Swiss francs by 2018.
- It will cut risk weighted assets by $60 billion by the end of the year. That’s lower than the $83-85 billion initially proposed in October.
- Credit Suisse will exit several areas of its global markets business. This includes “Distressed Credit, European Securitized Product trading and Long-Term Illiquid Funding.” The bank also says that it is “reducing capital allocation to other lines of business”.
In early February, the bank posted its first annual loss since 2008, seeing 2.4 billion francs ($2.4 billion; £1.6 billion) of losses.
Investors in the company are clearly worried about Credit Suisse’s recent performance, and shares have fallen more than 40% since October 2015. However, today’s confirmation of 2,000 more job cuts seems to be reassuring investors that the bank is serious about cutting costs and returning to profitability. Shares are up by 2% just over an hour after the market open. Here’s how that looks:
Alongside the cuts announcement, Credit Suisse also provided an update of its performance in Q1 of 2016. So far this year it has doubled its M&A revenues from the same time in 2015, seen 4.5 billion francs of inflows into its private banking division, and new net inflows of 3.6 billion francs into its Asia Pacific business.
Credit Suisse is not the only big European bank having to address a lack of profitability. In January, Deutsche Bank posted a huge €6.8 billion (£5.1 billion) loss for 2015. The bank is facing similar problems to Credit Suisse.