Credit Suisse is attempting to recover from a catastrophic sequence of business reversals and scandals. © Keystone / Walter Bieri
Swiss bank Credit Suisse is shedding thousands of jobs, selling off parts of its business and raising billions in extra capital in a bid to reverse a downward spiral in fortunes.
The bank announced on Thursday that it will slim down from a current headcount of 52,000 to 43,000 by the end of 2025. The job cuts will start this year with an initial tranche of 2,700 posts being axed.
Credit Suisse has suffered a string of setbacks in recent years by being on the wrong end of soured business deals and courtroom battles. Management is attempting to stop the rot with a radical overhaul of the bank’s operations and strategy.
The new strategic thrust is intended to bring costs down by 15% in the next three years and place a greater emphasis on the group’s wealth management and Swiss-based operations.
Significant parts of the group’s investment banking activities, mainly based in the United States, will be sold off to both raise cash and reduce its exposure to risk.
A new ‘Capital Release Unit’ has been set up specifically to sell off any assets that the bank now deems too risky and of low strategic importance.
Extra capital
Credit Suisse is also raising CHF4 billion ($4 billion) to shore up its wobbling capital base by issuing new shares. This includes a CHF1.5 billion capital injection from the Saudi National Bank, subject to the approval of an extraordinary general meeting scheduled for November 23.
Switzerland’s second largest bank has recorded nothing but losses over the last 12 months and posted a huge CHF4 billion loss for the third quarter of 2022. Most of this sum is attributable to a tax related charge resulting from its restructuring drive.
Credit Suisse chair Axel Lehmann admitted that the bank had lost focus in recent years, resulting in the need for a “radical strategy and a clear execution plan to create a stronger, more resilient and more efficient bank with a firm foundation”.
In addition to paring back its investment banking operations, Credit Suisse is also selling off other parts of the silverware, including a €334 million (CHF328 million) stake in the Spanish fintech company Allfunds.
The strategic overhaul was sparked by a catastrophic sequence of events, including losses incurred by the collapsed Greensill and Archegos deals last year and numerous court cases relating to contentious business activities and money laundering allegations.
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