Credit Suisse plans to cut around 5,000 jobs – source

A logo is pictured on Credit Suisse bank in Geneva, Switzerland, June 9, 2022. REUTERS/Denis Balibouse

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ZURICH, Sept 2 (Reuters) – Credit Suisse (CSGN.S) plans to cut around 5,000 jobs, or about one in 10 positions, as part of a cost-cutting campaign by Switzerland’s second-biggest bank , according to a source directly familiar with the matter. told Reuters.

The scale of the potential job cuts underscores the challenge facing Credit Suisse and new chief executive Ulrich Koerner, who is seeking to put the bank back on a level playing field after a series of scandals.

The bank declined to comment beyond repeating that it would provide an update on its strategy review with its third-quarter results, saying any earnings report was speculative.

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Credit Suisse has called 2022 a “transition” year with a changing of the guard, restructuring to reduce risk-taking in investment banking and a strengthening of wealth management.

The Zurich-based bank dismissed speculation that it could be bought or broken up.

Discussions about job cuts are ongoing and the number of cuts could still change, the source said. The Swiss newspaper Blick had earlier announced that more than 3,000 jobs would be cut.

Credit Suisse has already announced it will cut costs below 15.5 billion Swiss francs ($15.8 billion) in the medium term, from an annualized 16.8 billion francs this year.

So far, he has not planned any job cuts.

Koerner, promoted to CEO just over a month ago, has been tasked with cutting investment banking and cutting costs by more than $1 billion to help the bank recover from a series of setbacks and scandals.

Its strategic review, the second in less than a year, will assess options for the bank, while reaffirming its commitment to serving high net worth clients.

The Swiss lender is under increasing pressure to turn around activity and improve its financial resilience.

“Cost cutting is the easiest immediate step to take. But it’s not a strategy,” said Vontobel analyst Andreas Venditti. “You can find yourself in a vicious cycle, where jobs are cut, services decline and customers leave.”

Venditti highlighted another conundrum: “If restructuring costs, including job cuts, run into the billions, the bank may also need to raise more capital.”

Deutsche Bank analysts believe it may need to boost its capital by 4 billion Swiss francs to shore up its reserves and finance the overhaul.

Koerner, 59, a restructuring expert, succeeded Thomas Gottstein as CEO in August after two tumultuous years punctuated by huge losses, a rare court conviction for the bank in Switzerland and a 40% drop in its shares.

Between April and June, the bank recorded a loss of 1.59 billion Swiss francs, as legal costs increased. Its investment bank alone lost 1.12 billion Swiss francs before tax.

Two hits – a $5.5bn loss on the default of US family office Archegos Capital Management and the closure of $10bn of supply chain finance funds linked to the collapse of UK financier Greensill – also assaulted the bank.

In June, Credit Suisse was also found guilty of failing to prevent money laundering by a Bulgarian gang of cocaine traffickers in Switzerland’s first criminal trial against one of its major banks. He is appealing the conviction.

In a sign that Credit Suisse expects its fortunes to improve, a senior executive told Reuters it was still betting big on China and planned to launch a wealth management business there next year. Read more

The bank aims to start offering wealth management services in China next year by securing full ownership of its local securities firm.

($1 = 0.9825 Swiss francs)

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Reporting by Oliver Hirt, writing by Michael Shields; Editing by Elisa Martinuzzi, John O’Donnell, Alexander Smith and Jane Merriman

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