Cuts are also threatened at the headquarters in Zurich.
(Photo: Bloomberg via Getty Images)
Zurich Credit Suisse is considering cutting 4,000 jobs. The Handelsblatt learned this from people familiar with the savings plans. A significant part could therefore be omitted at the headquarters in Zurich. However, there is no final decision yet. Possible savings in investment banking are therefore not included in the figure.
Credit Suisse declined to comment on the information: “We have already said that we will communicate detailed information on the progress of our comprehensive strategy review along with the third-quarter figures,” said a spokeswoman. “Any coverage of possible outcomes prior to this is purely speculative in nature.”
At the end of July, the bank announced the replacement of Credit Suisse boss Thomas Gottstein and the selection of his successor Ulrich Körner. The bank had also announced that it would reduce the cost base by more than CHF 1 billion to CHF 15.5 billion. It has not yet been officially confirmed whether any jobs will be lost at all – and if so, how many. The bank intends to present details at the end of October.
In addition to cost reductions, Körner also wants to push through a redistribution of capital, away from investment banking and towards asset management. This is to be achieved by Credit Suisse selling part of its structured securities business. The division regularly generates high returns.
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However, the bank also has to have a lot of risk capital ready to secure the transactions. The participation of external investors could therefore relieve the bank without having to completely forego the income.
Some analysts had reacted skeptically to the plans. Internally, however, the step is well received. Insiders see this as an indication that the bank’s top management has learned from the hasty withdrawal from the so-called prime brokerage. The hedge fund trading deal was completed in response to deals with Archegos Fund that had left the bank with a loss of five billion Swiss francs.
Investment bank with an uncertain future
Credit Suisse had referred its remaining prime brokerage clients to the major French bank BNP Paribas. During the past quarter, however, the prime brokerage business proved to be one of the few revenue generators in investment banking. Excluding trading with hedge fund clients, Credit Suisse investment banking underperformed most of its peers.
The Credit Suisse scandals
It is uncertain whether a partial sale of the structured products business will remain: As the news agency “Bloomberg” reported, the board of directors is divided on the extent of the cuts in investment banking. According to the report, supervisors such as former Citigroup dealmaker Michael Klein and former JP Morgan manager Blythe Masters have spoken out against aggressive job cuts in recent weeks. Others are in favor of a further turning point in investment banking.
There is a fundamental question behind this: should the investment bank be downgraded to being a service provider for asset management or should it continue to be a mainstay of the bank? In the next few weeks, the bank will have to give a final answer to this question.
More: Clear cut in investment banking: How the second largest Swiss bank wants to get out of the crisis.