Credit Suisse is stepping up its biggest overhaul in almost a decade, saying Wednesday it will cut a further $821 million off costs and lay off 2,000 employees from its trading unit.
Since arriving at Switzerland’s second-largest bank nine months ago, new CEO Tidjane Thiam has been seeking to reduce its dependence on investment banking and refocusing on wealth management. Credit Suisse on Wednesday also announced another 800 million Swiss francs ($346 million) of writedowns in its global markets business in the first quarter.
The latest job cuts will come from Credit Suisse’s Global Markets division, bringing the bank’s total planned layoffs to 6,000. Credit Suisse has about 48,000 employees, with roughly 11,000 in global markets.
“This was the restructuring plan investors were hoping for last year,” George Karamanos, an analyst at Keefe, Bruyette & Woods, told Reuters. “A negative operating environment has forced management to address tough issues it avoided last time around.”
Credit Suisse said it had increased to “at least” 4.3 billion francs its targeted savings by 2018, up from 3.5 billion announced in October. It is aiming for 1.7 billion francs in cost savings in 2016 and is likely to make a first-quarter loss after exceptional items, Thiam said.
As the bank has tried to get out of positions in products such as distressed-debt securitized loans to companies, its global-markets unit wrote down $633 million in the fourth quarter. On a conference call, one analyst asked Thiam why he had not moved earlier to sell off illiquid trading positions.
“When I spoke on October 21, I was not aware of the existence of the positions on that scale,” Thiam replied, adding that he would have made deeper cuts then if he had known.
According to The Wall Street Journal, Credit Suisse’s troubles “are symptomatic of the broader malaise at Europe’s biggest investment banks. In addition to wrestling with depressed trading, tougher capital requirements and market volatility plaguing all of Wall Street, European banks are playing catch-up in dealing with trouble spots long ago addressed by U.S. rivals.”