Zurich A source with direct knowledge of the situation told Reuters that Switzerland’s second-largest bank, Credit Suisse, is thinking about cutting around 5,000 jobs, which is about one job in ten. This is part of an effort to cut costs at Switzerland’s second-largest bank.
The size of the possible job cuts shows how hard it will be for Credit Suisse and its new CEO, Ulrich Koerner, to put the bank back on a steady course after a series of scandals.
The bank wouldn’t say anything except to say that it would give an update on its strategy review when it reported its earnings for the third quarter. It said that any reporting on the results was just speculation.
Related: Credit Suisse Casts Doubt on China’s Ambitions Amid Strategy Redesign
Credit Suisse calls 2022 a “transition” year because there will be a change of leadership, a reorganisation to reduce risk-taking in investment banking, and an increase in wealth management.
The bank in Zurich has shot down rumours that it could be bought or broken up.
The source said that talks about cutting jobs are still going on and that the number of cuts could still change. Earlier, the Swiss newspaper Blick said that more than 3,000 jobs would be lost.
Credit Suisse has already said that it will cut costs to less than 15.5 billion Swiss francs ($15.8 billion) over the next few years. This year, the company’s annualised costs were 16.8 billion Swiss francs.
So far, it hasn’t said how many jobs will be cut.
Koerner was made CEO just over a month ago. To help the bank get back on its feet after a series of setbacks and scandals, he has been asked to cut back on investment banking and save more than $1 billion.
His strategic review, which is the second one he has done in less than a year, will look at the bank’s options and reaffirm that it will continue to serve wealthy customers.
More and more people are putting pressure on the Swiss lender to turn its business around and make it stronger financially.
“Cutting costs is the easiest thing it can do right away. But that’s not a plan, A Vontobel analyst named Andreas Venditti said this. “You can get stuck in a cycle where jobs get cut, service gets worse, and customers leave.”
Venditti also brought up another problem: “If the costs of restructuring, including job cuts, reach the billions, the bank may also need to raise more money.”
Related: In a change of leadership, Credit Suisse hires Joshi from Deutsche.
Deutsche Bank (ETR:DBKGn) analysts think that the bank may need to add 4 billion Swiss francs to its capital to shore up its buffers and pay for the revamp.
Thomas Gottstein, who was CEO for two years, was replaced as CEO by Koerner, a 59-year-old expert in restructuring, in August. During those two years, the bank had huge losses—a rare court conviction in Switzerland—and its shares fell by 40%.
Between April and June, the bank lost 1.59 billion Swiss francs because it had to pay more and more in legal fees. It lost 1.12 billion Swiss francs before taxes just from its investment bank.
The bank has also taken two big hits: a $5.5 billion loss because of the default of the U.S. family office Archegos Capital Management and the closing of $10 billion of supply chain finance funds that were connected to the collapse of the British finance company Greensill.
In Switzerland’s first criminal trial of one of its big banks, Credit Suisse was also found guilty of not stopping a Bulgarian drug trafficking gang from laundering money. It is going to court to fight the conviction.
A senior executive told Reuters that Credit Suisse is still putting a lot of money into China and plans to start a wealth business there next year. This shows that Credit Suisse thinks its business will get better.
Related: The conflict between Credit Suisse and SoftBank-FT escalates to $440 million in court
After getting full ownership of its local securities venture, the bank plans to start offering wealth management services in China next year.
$1 is worth 0.9825 Swiss francs.
