Credit Suisse Group on Wednesday announced an extra 800 million Swiss francs ($821 million) in cost cuts and plans to shrink its investment bank further as it accelerates a restructuring plan aimed at revitalising its earnings.
The cuts include eliminating 2,000 jobs at its Global Markets business to better weather challenging market conditions, Switzerland's second-biggest bank said.
"Today, we are announcing an increase to our 2018 cost reduction target from 3.5 billion Swiss francs gross savings to at least 4.3 billion francs, driving our absolute operating cost base below 18 billion francs by 2018. For 2016, we aim to achieve 1.7 billion francs in cost savings," Chief Executive Tidjane Thiam said in a statement.
The Zurich-based bank had said in February it accelerated cost savings to lock in 1.2 billion of the targeted 3.5 billion francs by 2018, with around 4,000 jobs being cut. The latest moves bring job cuts to 6,000.
Its shares were indicated around 2 percent higher in pre-market business.
Thiam said a combination of high costs, exposure to illiquid inventory in fixed income, "historically low levels of client activity" and challenging market conditions had led to disappointing results at Global Markets.
"In this context, we have taken immediate action to reduce outsized positions in activities not consistent with our new strategy and systematically reduced our exposures," Thiam said.
Credit Suisse is among some of the world's biggest banks grappling with record low interest rates, slide in commodity prices and slower growth in emerging markets such as China.
Thiam said that write-downs at Global Markets, which totaled $633 million in the fourth quarter of 2015, were lower in the first quarter at $346 million as of March 11, 2016.
The writedowns would trigger a first-quarter loss at the business, but a smaller one than in the fourth quarter.
"Revenues (at Global Markets) have remained weak in the period, with negative operational leverage," said Thiam, who has been putting the bank's focus more on managing wealth.
On a brighter note, the bank cited net new money inflows so far this year of 3.6 billion francs at its Asia Pacific business, 7.1 billion at international wealth management, and 4.5 billion at its Swiss universal bank, whose partial public listing in 2017 was on track if market conditions permit.
(Reuters)
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