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Credit Suisse plans to cut about 5,000 jobs -source

Credit Suisse plans to cut about 5,000 jobs -source

A logo is depicted on the Credit Suisse bank in Geneva, Switzerland, June 9, 2022. REUTERS/Denis Balibouse

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ZURRICH, Sept. 2 (Reuters) – Credit Suisse (CSGN.S) is considering cutting about 5,000 jobs, about one position in 10, as part of a cost-cutting campaign at Switzerland’s second-largest bank, a source with direct knowledge of the case told Reuters.

The magnitude of the potential job losses underscores the challenge for Credit Suisse and new CEO Ulrich Koerner, who are looking to rebalance the bank after a series of scandals.

The bank declined to comment, except reiterating that it would provide an update on its strategy review with its third-quarter earnings, saying any reporting on the results was speculative.

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Credit Suisse has called 2022 a “year of transition” with a changing of the guard, restructuring to limit risk-taking in investment banking and ramping up asset management.

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

Discussions about job cuts are ongoing and the number of cuts could change, the source said. The Swiss newspaper Blick previously reported that more than 3,000 jobs would be lost.

Credit Suisse has already said it will cut costs below 15.5 billion Swiss francs ($15.8 billion) in the medium term, from 16.8 billion francs year-on-year this year.

So far, it has not outlined any job losses.

Koerner, promoted to CEO just over a month ago, has been tasked with curbing investment banking and cutting more than $1 billion in costs to help the bank recover from a series of setbacks and scandals.

Its strategic review, the second in less than a year, will evaluate the bank’s options while reaffirming its commitment to serving high net worth clients.

The Swiss lender is under increasing pressure to turn the company around and improve its financial resilience.

“Reducing costs is the easiest immediate step it can take. But it’s not a strategy,” said Andreas Venditti, analyst at Vontobel. “You can end up in a vicious circle where jobs are cut, service declines and customers leave.”

Venditti highlighted another conundrum: “Should restructuring costs, including job cuts, run into the billions, the bank may also need to raise more capital.”

Analysts at Deutsche Bank estimate it may need to bolster capital by 4 billion Swiss francs to bolster its buffers and fund the refurbishment.

Koerner, 59, a restructuring expert, succeeded Thomas Gottstein as CEO in August after a tumultuous two years punctuated by massive losses, a rare court conviction for the bank in Switzerland and a 40% drop in its shares.

Between April and June, the bank recorded a loss of 1.59 billion Swiss francs, while legal costs mounted. The investment bank alone lost 1.12 billion Swiss francs before taxes.

Twin hits — a $5.5 billion loss from the default of US family-owned Archegos Capital Management and the shutdown of $10 billion in supply chain finance funds linked to collapsed British financier Greensill — have also ravaged the bank. .

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

In a sign that Credit Suisse expects an improvement in its fortunes, a senior executive told Reuters it still bets heavily on China and plans to launch an equity business there next year. read more

The bank aims to start offering asset management services in China next year, based on securing full ownership of its local securities firm.

($1 = 0.9825 Swiss Franc)

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Reporting by Oliver Hirt, written by Michael Shields; Editing by Elisa Martinuzzi, John O’Donnell, Alexander Smith and Jane Merriman

Our Standards: The Thomson Reuters Trust Principles.

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