Credit Suisse to cut 3,400 jobs, raise cash as profits drop

AP News
Posted: Oct 21, 2015 2:08 PM

GENEVA (AP) — Credit Suisse says it plans to cut at least 3,400 jobs over three years in Britain and Switzerland and raise billions in a new share offering after its net profit fell 24 percent in the third quarter.

The Swiss firm on Wednesday reported net income attributable to shareholders dropped to 779 million Swiss francs ($815 million), from 1.03 billion francs a year earlier, mostly because of an "unfavorable market conditions" in investment banking. Revenues declined 8 percent to 5.98 billion francs.

Separately on Wednesday, the Swiss government announced long-awaited rules aimed to reduce "too-big-to-fail" risks at Credit Suisse and the country's other big bank, UBS. By 2019, the banks must maintain a leverage ratio of no more than 5 percent — up from a 3.1 percent requirement today.

In essence, the new rules require the banks to hold more capital as a cushion for losses.

Credit Suisse, a broad bank but which has specialized in investment banking and wealth management announced plans to issue new shares in moves expected to bring in over 6 billion francs.

Credit Suisse's new CEO, Tidjane Thiam, said the results "reinforce the need for a restructuring of the bank" to reduce earnings volatility and focusing more on private banking and wealth management clients. He said the results included a "resilient performance" in its Asian business.

"In the third quarter, difficult market conditions led to low client activity in both our investment banking, and private banking and wealth management divisions," he said in a statement. "This translated into lower profits and was particularly visible in our fixed income sales and trading performance."

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Company spokesman Christoph Meier said Credit Suisse plans to reduce some 1,800 jobs in its operations in Britain and another 1,600 in Switzerland as part of efforts to achieve 2 billion Swiss francs in cost savings over the next three years. Most of the reductions in Switzerland are expected to come through attrition, he said.

The 159-year-old company based in Zurich currently employs more than 45,000 people in more than 50 countries.