Credit Suisse, entangled in numerous setbacks, announced Thursday a vast recovery plan including a “radical restructuring” of its investment bank and a reduction in costs of 15% by 2025. The bank also wants to raise around 4 billion francs and some 9,000 jobs are to be cut.
Credit Suisse plans to reduce its costs by 15% or 2.5 billion francs in order to reduce its operating costs to some 14.5 billion by 2025. Of this amount, 1.2 billion are to be saved next year.
These savings measures will have an impact on employment, the bank intends to reduce its workforce by 9,000 positions by the third quarter of 2025. The reduction of 2,700 full-time equivalents is currently underway. The bank also plans to reduce its costs of consultants by 50% and its expenses with subcontractors by 30%.
Until now, the number two Swiss bank hadn’t leaked anything about its plans for reshuffles, despite market pressure and the many rumors relayed by the press.
Investment banking in the viewfinder
Regarding its troubled investment bank, the management has undertaken to “take decisive measures to restructure” this entity which must now focus on its core business. These measures should make it possible to reduce risky assets by 40% within three years, detailed the bank with the two veils in a press release.
The new entity created CS First Boston, comprising capital markets and advisory activities, must act independently. Director Michael Klein, who will step down from the board, is to become CS First Boston’s general manager next year.
The group also wants to create a defeasance unit for its loss-making activities, the Capital Release Unit (CRU), including securitized product activities, Prime Services, loan activities in certain emerging countries and the establishment’s presence in certain countries. . The unit will be led by Louise Kitchen.
Credit Suisse has also concluded an agreement to transfer a significant part of its unit in charge of securitization, Securitized Products Group (SPG), to a group of investors led by the American Apollo Global Management. This agreement should be finalized in the first half of 2023.
Arrived in 2020, the boss of the investment bank Christian Meissner will leave the establishment with immediate effect.
At the head of the investment bank of Credit Suisse, the Austrian Christian Meissner had been in office since 2020. [Credit Suisse]
CS will raise 4 billion francs
The establishment intends to raise some 4 billion francs by issuing new shares, in particular from Saudi National Bank which has committed up to 1.5 billion or 9.9% of the share capital. Credit Suisse expects costs of 2.9 billion until the end of 2024.
Until now, the number two Swiss bank had not leaked anything about its redesign plans, despite market pressure and numerous rumors relayed by the press.
Credit Suisse had, however, hinted that it intended to become “more focused and more agile”. Wealth management and Swiss activities were to be strengthened, while investment banking was to undergo a slimming cure, the group had previously indicated.
Big loss in the 3rd quarter
Credit Suisse suffered a net loss of 4.03 billion francs in the third quarter, after a profit of 434 million a year earlier. This is the fourth quarterly loss in a row for the second Swiss bank and it is well above analysts’ forecasts, which had forecast an average of -602 million.
Operating income reached 3.80 billion francs, in line with forecasts. While investment banking suffered a loss of 666 million, wealth management recorded a pre-tax gain of 21 million, activities in Switzerland of 383 million and asset management of 90 million.
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