Wednesday, November 30, 2022

Credit Suisse slashing thousands of jobs as part of ‘radical strategy’ – National | Globalnews.ca

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Swiss bank Credit Suisse unveiled Thursday a “radical strategy” aimed to overcome a string of recent troubles that have dented its reputation, involving cost cuts, staff reductions, steps to lower risk and a cash infusion through a share purchase from a leading Saudi bank.

The Zurich-based bank also said it will revive the CS First Boston investment bank brand, once a stalwart of Wall Street, as it reported a 4-billion Swiss franc ($4.1 billion) loss in the third quarter.

Credit Suisse announced plans to raise some 4 billion Swiss francs ($4.1 billion) by issuing new shares to some investors, including the Saudi National Bank, which has committed to put in some 1.5 billion Swiss francs ($1.5 billion) – putting its shareholding in the Swiss bank at just under 10 per cent.

Overall, Credit Suisse predicted restructuring charges and other costs totaling 2.9 billion Swiss francs ($2.9 billion) in connection with its “transformation” between the second quarter and 2024, which would be paid for by divestments, leaving some businesses, raising capital and using existing bank resources.

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The “historical moment” for the Zurich-based bank, as new CEO Ulrich Koerner put it, comes as Credit Suisse acknowledged a “disappointing” recent performance at a time of market and macroeconomic uncertainty.

Chairman Axel Lehmann said the bank had become “unfocused,” and its board had assessed its future direction.

“Today we are announcing the result of that process -_ a radical strategy and a clear execution plan to create a stronger, more resilient and more efficient bank with a firm foundation, focused on our clients and their needs,” Lehman said, insisting a “cultural transformation” was under way.

Read more:

What’s happening with Credit Suisse? Inside the Swiss bank’s market tumult

The bank plans to reduce its cost base by about 15% – or 2.5 billion Swiss francs ($2.5 billion) – by 2025, and said a “headcount reduction” of about 5% of its workforce – about 2,700 employees – was already under way.  By the end of 2025, the bank plans to reduce its headcount to 43,000 from 52,000, meaning a reduction of 9,000 employees.

The bank said it has struck a deal to transfer a “significant portion” of its securitized products group to an investor group led by Apollo Global Management.

Credit Suisse said revenues in the third quarter rose 4% to 3.8 billion Swiss francs ($3.9 billion).

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Credit Suisse has sought transformations before and has faced issues including bad bets on hedge fund investments, among other troubles. Last week it announced settlements in the United States and France.

Over the summer, a Swiss court fined Credit Suisse for failing to prevent money laundering linked to a Bulgarian criminal organization a decade-and-a-half ago.

Credit Suisse, the No. 2 Swiss international bank after crosstown rival UBS, has origins that date to the mid-19th century and the early development of Switzerland’s rail network.

&copy 2022 The Canadian Press





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