Switzerland’s second-biggest bank Credit Suisse forecasted a surprise Q4 pre-tax loss of up to $1.6 billion as the embattled bank undertakes a radical overhaul. In addition to revamping its investment banking unit, Credit Suisse announced measures include slashing 9,000 jobs in the next three years.
In particular, the Investment Bank has been impacted by the substantial industry-wide slowdown in capital markets and reduced activity in the Sales & Trading businesses, exacerbating normal seasonal declines, and the Group’s relative underperformance. In addition, client activity remains subdued in the Wealth Management and Swiss Bank divisions, the bank highlighted.
The Zurich-based bank added that it expects to book losses in both the wealth management division and its investment banking unit due to market conditions, continued outflows of customer assets and the sale of non-core businesses.
Credit Suisse layoffs
The Investment Bank further noted that it started 2,700 job cuts in the fourth quarter and is aiming to slash about 9,000 positions by 2025, reported Bloomberg. The bank’s reorganisation is aimed at dramatically reducing the scale of its investment bank, in a bid to repair the damage following a series of scandals.
Credit Suisse’s investment bank reported a loss of 3.7 billion Swiss francs in 2021 and backed that up with a 992 million Swiss franc loss in the first half of 2022. It was hit by the implosion of US fund Archegos, which cost Credit Suisse more than $5 billion.
The Investment Bank is one of 30 banks globally deemed too big to fail, forcing it to set aside more cash to weather a crisis.
Worth mentioning here is that the world’s high net worth individuals, have pulled 10 per cent of all the assets under management at the bank’s key wealth management division since the start of October. Credit Suisse has been battered by a string of scandals and losses, including a $5.5 billion loss from the unravelling of US investment firm Archegos, according to Reuters.
It also had to freeze $10 billion worth of supply chain finance funds linked to insolvent British financier Greensill.
