Job cuts in the cards at Credit Suisse following third profit warning of the year
Credit Suisse Group AG is weighing a fresh round of job cuts, part of a renewed push to slash costs after warning of a second-quarter loss, according to people familiar with the matter.
The Swiss bank is considering headcount reductions across divisions including investment banking and wealth management in different regions, said the people, who asked not to be identified as the matter is private.
The dismissals are likely to come as the bank prepares to update investors on risk, compliance, technology and wealth management on June 28, said the people. Final numbers are still to be decided, they said. A Credit Suisse spokeswoman declined to comment, pointing to the lender’s statement on Wednesday.
The bank warned on Wednesday it expects a loss at the group-wide level and at its investment bank in the second quarter. Market conditions have remained challenging after the invasion of Ukraine and monetary tightening by central banks across the world, leading to weak customer flows and ongoing client deleveraging.
“Given the economic and market environment, we are accelerating our cost initiatives across the Group with the aim of maximizing savings from 2023 onwards,” Credit Suisse said, without providing more details.
Chief Executive Officer Thomas Gottstein’s two years in charge have seen the $5.5 billion hit from Archegos, the collapse of partner Greensill Capital and a string of profit warnings that eroded investor confidence, weakened key businesses and prompted an exodus of talent. The lender has said that 2022 will be a year of transition as it seeks to reduce risk at the investment bank while shifting resources to wealth management.
The Swiss lender employed more than 50,000 as of the end of 2021, according to its website. It recently overhauled top management after five profit warnings in the past six quarters, saying that its chief financial officer, legal counsel and head of Asia would all be either stepping down or leaving the company. It also named former Bank of Ireland Group Plc Francesca McDonagh as head of the Europe, Middle East and Africa region.
Even before Wednesday’s warning, the bank had been struggling to keep pace with rivals’ trading results after reducing risk because of Archegos. Equities revenue dropped 47% in the first quarter while the fixed income business, typically a source of strength, did even worse. Results laid bare the other steep challenges still facing the bank as it seeks to regain investor confidence, including still-to-come legal hits and weaker-than-expected wealth management results.
Beyond the bank’s self-inflicted damage, Gottstein is contending with a multitude of macro factors outside his control that further risks derailing the recovery. Wealthy investors, particularly in the Asia Pacific region, are sitting out the volatility in markets, hurting fees for the private bank. Covid lockdowns in the region are reviving fears of supply chain disruptions, while M&A activity has taken a hit after Russia’s invasion of Ukraine.
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