Credit Suisse to cut 1,000 jobs in Switzerland amid restructuring
Credit Suisse, one of the largest banks in Switzerland, announced on Wednesday that it will slash 1,000 jobs in its home market as part of a global restructuring plan to reduce costs and restore profitability.
Credit Suisse faces multiple challenges after losses and scandals
The bank has been struggling to recover from a series of losses and scandals that have tarnished its reputation and eroded its capital base. In the first half of 2021, Credit Suisse reported a net loss of 81 million Swiss francs ($88 million), compared to a net profit of 2.5 billion francs ($2.7 billion) in the same period last year.
Some of the factors that contributed to the bank’s poor performance include:
- The collapse of Archegos Capital Management, a US-based family office that defaulted on margin calls from Credit Suisse and other lenders, resulting in a $5.5 billion loss for the bank.
- The liquidation of Greensill Capital, a UK-based supply chain finance firm that was a major client of Credit Suisse’s asset management division, leading to a $2.7 billion write-down and legal disputes with investors.
- The spying scandal that involved former CEO Tidjane Thiam and other senior executives, triggering an internal investigation and regulatory scrutiny.
- The money laundering allegations that involved former FIFA president Sepp Blatter and other soccer officials, exposing the bank to legal risks and reputational damage.
Credit Suisse aims to simplify its structure and focus on core businesses
In response to these challenges, Credit Suisse has launched a comprehensive restructuring plan that aims to simplify its structure, streamline its operations, and focus on its core businesses of wealth management and investment banking.
The plan involves:
- Creating a new division called Credit Suisse International that will combine its international wealth management, investment banking, and capital markets businesses under one roof.
- Separating its Swiss universal bank business from its international operations and creating a new Swiss holding company that will oversee its domestic activities.
- Reducing its risk-weighted assets by at least 25% by the end of 2023, mainly by exiting or downsizing some of its non-core or low-performing businesses such as prime brokerage, emerging markets, and leveraged finance.
- Cutting its annual costs by at least 1.4 billion francs ($1.5 billion) by the end of 2023, mainly by reducing headcount, optimizing IT systems, and rationalizing real estate.
Credit Suisse expects to absorb most of the job cuts through natural attrition
As part of its cost-cutting measures, Credit Suisse said it will reduce its global workforce by about 5%, or around 2,500 jobs, by the end of 2023. Of these, about 1,000 jobs will be cut in Switzerland, where the bank employs around 17,000 people.
However, Credit Suisse said it expects to absorb most of the job cuts through natural attrition, voluntary departures, and redeployment of staff to other roles or locations. The bank also said it will provide support and assistance to those affected by the layoffs, such as severance payments, outplacement services, and retraining opportunities.
Credit Suisse said it hopes that the restructuring plan will help it restore its financial strength, improve its operational efficiency, and enhance its competitive position in the global banking industry. The bank also said it remains committed to serving its clients and stakeholders with excellence and integrity.