After a series of scandals, Credit Suisse is FIRING thousands of employees

After a series of scandals, Credit Suisse is FIRING thousands of employees

Credit Suisse is considering cutting about 5,000 jobs, about one in 10 positions, as part of a cost-cutting drive at Switzerland’s second-largest bank.

The scale of the potential layoffs underscores the challenge they face Swiss credit and new CEO Ulrich Kerner, who is trying to get the bank back on an even footing after a series of scandals.

Bank declined to comment on the allegations, reiterating that it would provide an updated review of its strategy with third-quarter earnings, saying any reporting of results was speculative.

Credit Suisse has called 2022 a “transition” year with a changing of the guard, restructuring, to reduce risk-taking in investment banking and increase wealth management. The Zurich-based bank dismissed speculation that it could be bought.

Credit Suisse (YouTube)

Talks about layoffs are ongoing and the number of cuts could change, a source familiar with the story said, according to Reuters. The Swiss newspaper Blik previously reported that more than 3,000 jobs would be cut.

Credit Suisse has already said it will cut costs below 15.5 billion Swiss francs in the medium term, down from 16.8 billion francs annually this year, but has so far not indicated any job cuts.

Recovery from scandal

Kerner, promoted to CEO just over a month ago, has been tasked with cutting investment banking and expenses by more than $1 billion to help the bank recover from a string of failures and scandals.

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

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

“Cutting costs is the easiest immediate step one can take. But that’s not a strategy,” said Andreas Venditti, an analyst at Vontobel, adding: “You can end up in a vicious circle, where jobs are cut, services decline, and customers leave.”

Novac (Unplash)

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

Kerner, a restructuring expert, succeeded Thomas Gottstein as CEO in August after a tumultuous two years punctuated by huge losses, a rare court ruling for the bank in Switzerland and a 40 percent drop in its shares.

Huge losses

In the period between April and June, the bank posted a loss of 1.59 billion Swiss francs as legal costs mounted. Its investment bank alone lost 1.12 billion Swiss francs before tax.

The twin hits – a $5.5bn default loss by US family office Archegos Capital Management and the closure of $10bn of supply chain finance linked to failed British financier Greensill – also hit Credit Suisse.

Franak (Pixabay)

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 against one of its biggest banks. The conviction is being appealed.

The bank aims to start offering wealth management services in China next year by securing full ownership of its local securities venture, Reuters reports.

Source: BIZLife

Photo: Beta/AP/Unplash/Pixabay/YT Scrn

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