Credit Suisse to speed up cuts as revenue outlook worsens
GLOBAL investment bank Credit Suisse will accelerate the cost cuts announced just weeks ago, said the bank’s chairman, Axel Lehmann, as client outflows and a slowdown in activity weigh on its revenue outlook.
“We are really doubling down on the execution,” he said in a television interview with Bloomberg on Friday (Dec 2). This came a day after Reuters cited sources that said the embattled bank was looking for ways to speed up savings.
Credit Suisse said in October that it intended to reduce its cost base by around 2.5 billion Swiss francs (US$2.7 billion) to 14.5 billion Swiss francs in 2025.
Lehmann said: “We are definitely exceeding 1.2 billion (Swiss francs) up until the end of next year. So we try to front-load and not back-load the implementation.”
The sources, who requested anonymity, said that the cost savings are likely to involve more job cuts than previously announced for the first wave of reductions. The cuts will include the bank’s mainstay wealth business.
In October, the bank said it planned to cut 9,000 jobs of the 52,000 it had at the time.
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Credit Suisse declined to comment on job cuts in its Hong Kong private banking business, but two of the sources said that about 5 per cent of its private banking headcount in the Asian financial hub will be let go. They added that the cuts will target mainly mid- and junior-level bankers, in reductions that go deeper than what was outlined before.
The sources also said that the cuts in Hong Kong involved those associated with the bank’s China wealth management business.
Singapore is Credit Suisse’s other wealth hub in Asia.
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Credit Suisse told Reuters on Thursday: “As previously outlined, the bank is already making strides with these cost-reduction activities, following a clear execution roadmap.”
It said it would eliminate 2,700 jobs as it scales back its scandal-hit investment banking arm to increase its focus on global wealth and asset management.
However, in the six weeks through Nov 11, clients of the loss-making bank pulled out 6 per cent of assets under its management. The drain led to the liquidity of some of Credit Suisse’s entities dropping below regulatory requirements. The client outflows also hit the bank’s revenue.
However, Lehmann said on Thursday that client outflows have partially reversed, and very few clients have left the bank entirely.
Also on Thursday, Credit Suisse shares fell to a record low, near the offer price of the 2.2 billion Swiss franc rights issue needed to stabilise its finances.
The fresh round of private banking cuts signals the challenges that Credit Suisse faces as it pivots towards banking for the wealthy. REUTERS
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