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Credit Suisse to cut further 2,000 jobs

Staff writer |
Since October 2015, Credit Suisse made good progress in reducing its fixed cost base across the organization and its cost program is moving at pace.

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Tidjane Thiam, chief executive officer of Credit Suisse, said: oday, we are announcing an increase to our 2018 cost reduction target from CHF 3.5 billion gross savings to at least CHF 4.3 billion, driving our absolute operating cost base below CHF 18 billion by 2018. For 2016, we aim to achieve CHF 1.7 billion in cost savings.”

"Regarding our Global Markets activities, the combination of a high and inflexible cost base, exposure to illiquid inventory in fixed income, historically low levels of client activity and challenging market conditions has led to disappointing financial results.

"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.

"Write-downs were USD 633 million in 4Q15 and were lower in 1Q16 at USD 346 million as of March 11, 2016. Revenues have remained weak in the period, with negative operational leverage.

"More fundamentally and in parallel, we have reassessed our portfolio of business in this new context and are engaged in a further restructuring of Global Markets.

"Our reconfigured Global Markets activities will consume less capital and produce more stable earnings with a more fee-based, client-driven model.

"We are reducing our RWA target from USD 83-85 billion announced in October 2015 to USD 60 billion and our leverage target from USD 380 billion to USD 290 billion by end-2016. Going forward, our activities will be more closely aligned to our wealth management and IBCM divisions.

"Our divisions targeted for growth have been making good progress in 1Q16 and we have recorded positive NNA inflows for APAC, IWM and Swiss UB of CHF 3.6 billion, CHF 7.1 billion and CHF 4.5 billion, respectively, year to date.

"We remain confident about the long-term potential for profitable growth in our chosen markets, as well in our IBCM activities.

"Our capital position remains strong in spite of challenging market conditions. The cost savings underway and the continued restructuring of Global Markets will contribute to making our capital position more resilient.

"In addition, we plan to execute asset and business sales of more than CHF 1.0 billion in 2016. We will also adjust our growth investments, keeping up to CHF 1.0 billion of the announced CHF 1.5 billion growth investment spend discretionary.

"With these actions, we aim to operate between 11% and12% look-through CET1 ratio in 2016 in challenging conditions.

"To date, we have announced a headcount reduction of 6,000 of which 2,800 have been actioned year to date. Every division has contributed to the cost savings and headcount reductions over the quarter.

"Today, we are in a position to set a gross cost savings target of CHF 1.7 billion for 2016 and CHF 1.4 billion on a net basis. This will lead to an operating cost base of CHF 19.8 billion in 2016.

"The Group is increasing its 2018 gross cost saving target from CHF 3.5 billion to at least CHF 4.3 billion and its 2018 net cost saving targets are increased from CHF 2.0 billion to at least CHF 3.0 billion. This will lead to an operating cost base of below CHF 18.0 billion by end-2018. The Global Markets’ cost base will be reduced from CHF 6.6 billion at end-2015 to CHF 5.4 billion by end-2018.

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