Credit Suisse to cut 9,000 jobs, some in Singapore, after posting $5.7b Q3 loss

GENEVA – Credit Suisse announced a radical series of measures on Thursday aimed at turning around the beleaguered bank following huge third-quarter losses, including 9,000 job layoffs, spinning off its investment bank and raising fresh capital.

Switzerlands second-biggest bank said the strategic revamp was intended to create a simpler, more focused and more stable bank and put an end to a series of scandalsthat have shaken the institution, including an unprecedented prosecution at home involving laundering money for a criminal gang.

Credit Suisse said it expects to run the bank with approximately 43,000 staff by the end of 2025 compared with 52,000 at the end of September, reflecting natural attrition and targeted headcount reductions.

Singapore will see some layoffs, with the cuts to come from the banks contract staff, a source familiar with the company but who was not authorised to speak told The Straits Times.

The bank had already started implementing cost reduction activities in the second half of this year.

In a statement, Credit Suisse said measures that are already mandated include a targeted 50 per cent reduction in consultancy spending and a 30 per cent reduction in contractor spending, with the benefits expected in 2023. A headcount cut of 2,700 full-time-equivalent employees, or 5 per cent of the groups global workforce, is expected to take place in the fourth quarter of 2022.

Mr Edwin Low, the banks Asia-Pacific chief executive, told ST: Today Credit Suisse took decisive action to raise new equity, reshape the investment bank to reallocate capital for client-facing needs and transform the bank to be stronger, simpler and singularly focused to serve our clients.

The bank has outlined what its chairman Axel Lehmann dubbed a blueprint for success, after racking up a 4 billion Swiss franc (S$5.7 billion) loss in the third quarter of the year and following torrid weeks for the group.

CreditSuisseclients pulled funds in recent weeks at a pace that saw the lender breach some regulatory requirements for liquidity, the bank said, underscoring the impact on its business of wild market swings and a social media storm.

The group added that it was stable throughout.

The bank intends to raise capital worth 4 billion Swiss francs through the issuance of new shares to qualified investors. Saudi National Bank (SNB), the Kingdoms biggest lender, committed to invest up to 1.5 billion francs inCreditSuisseto achieve a shareholding of up to 9.9 per cent.

The Swiss bank said it also aims to separate out its investment bank to create CS First Boston, focused on advisory and capital markets, and hopes to attract third-party capital and set up a partnership with the newCreditSuisse.

SNB may also take part in a future capital raising byCreditSuissewhich aims to support the establishment of an independent investment bank focused on advisory and capital markets activities, the Saudi lender said in a bourse filing.

CreditSuissesaid it will create a capital release unit to wind down non-strategic, higher-risk businesses, while announcing the sale of a large part of its securitised products business.

The banks overhaul, aiming to put behind it the worst crisis in its history, is the third attempt in recent years by successive chief executives to turn around the embattled group. More On This Topic Credit Suisse in talks to sell SPG assets to Apollo, Pimco Credit Suisse to pay $333 million to settle tax suit The bank had been rushing to raise money and free up capital by selling assets, keen to limit how much cash it would have to raise from investors to fund its overhaul, handle its legacy litigation costs and retain a cushion for rough markets ahead.

New CEO Ulrich Koerner said: This is a historic moment for Credit Suisse. We are radically restructuring the investment bank to help create a new bank that is simpler, more stable and with a more focused business model built around client needs. REUTERS, AFP Additional reporting by Luke Pachymuthu More On This Topic Three Credit Suisse private bankers in Singapore leaving: Sources Credit Suisse's Young Jin Yee to join Deutsche Bank as Asia wealth head