Credit Suisse considers plans to eliminate 5,000 jobs in cost-cutting drive

New chief executive Ulrich Koerner has the task of paring back investment banking and reducing expenses by more than $1 billion

The scale of the potential job cuts underlines the challenge facing Credit Suisse and its new chief executive. AP
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Credit Suisse is considering plans to eliminate about 5,000 jobs, about one position in ten, as part of a cost-reduction drive at Switzerland's second-biggest bank, a source said.

The scale of the potential job cuts underlines the challenge facing Credit Suisse and its new chief executive, who is seeking to put it back on an even keel after a string of scandals.

The bank declined to comment beyond repeating that it would give an update on its strategy review with its third-quarter earnings, saying that any reporting on outcomes was speculative.

Credit Suisse has called 2022 a “transition” year with a change of guard, restructuring to curtail risk-taking in investment banking and bulking up wealth management.

The Zurich-based bank has dismissed speculation that it could be bought or broken up.

The discussions about job cuts are continuing and the number of reductions could still change, the source said. Swiss newspaper Blick earlier reported that more than 3,000 jobs would be shed.

Credit Suisse has already said it will cut costs below 15.5 billion Swiss francs ($15.8bn) in the medium term, versus an annualised 16.8bn francs this year.

So far, it has not outlined job cuts.

Ulrich Koerner, who was promoted to chief executive of Credit Suisse a month ago, has been given the task of paring back investment banking and cutting more than $1bn in costs to help the bank recover from a string of setbacks and scandals.

His strategic review, the second in less than a year, will evaluate options for the bank, while reaffirming its commitment to serving wealthy customers.

Credit Suisse is under increasing pressure to turn around the business and improve its financial resilience.

Analysts at Deutsche Bank estimate that it may need to bolster capital by 4bn francs to shore up its buffers and fund the revamp.

Mr Koerner, 59, a restructuring expert, succeeded Thomas Gottstein in August after a tumultuous two years punctuated by huge losses, a rare court conviction for the bank in Switzerland and a 40 per cent plunge in its shares.

Between April and June, the bank chalked up a 1.59bn franc loss, as legal costs mounted. Its investment bank alone lost 1.12bn francs before tax.

Twin hits — a $5.5bn loss on the default of US family office Archegos Capital Management and the closure of $10bn worth of supply chain finance funds linked to collapsed British financier Greensill — have also beset the bank.

In June, Credit Suisse was also convicted of failing to prevent money laundering by a Bulgarian cocaine trafficking gang in Switzerland's first criminal trial of one of its major banks. It is appealing against the conviction.

Updated: September 02, 2022, 6:56 AM