The bank is trying to reduce risk and relocate resources to wealth management.
Credit Suisse is considering a fresh round of job cuts, as part of an extended push to trim costs after cautioning of a second-quarter loss, according to people with knowledge of the matter.
The Swiss bank is weighing headcount cuts across divisions including wealth management and investment banking in different regions, said the people, who requested to remain anonymous as the matter is private.
These dismissals are expected to come as the bank gets ready to update investors on risk, compliance, technology, and wealth management on June 28th, according to reliable sources. Final numbers are still to be determined, they said. A spokeswoman for Credit Suisse refused to comment, hinting at the lender’s statement on Wednesday.
Notably, the bank cautioned on June 8 that it sees a loss at the group-wide level and its investment bank in the second quarter. Market conditions have continued to be difficult after monetary tightening by central banks across the world and the invasion of Ukraine, causing slow customer flows and ongoing client deleveraging.
“Given the economic and market environment we are accelerating our cost initiatives across the group intending to maximize savings from 2023 onwards, Credit Suisse said, without providing more details.”
Chief executive officer Thomas Gottstein has spent the last two years as the head. During his tenure, have witnessed the collapse of partner Greensill Capital, a $5.5 billion hit from Archegos, and a series of profit warnings that destroyed investor confidence diminished key businesses and caused an exodus of talent.
The lender has said that this year will be a year of change as it attempts to reduce risk at the investment bank while relocating resources to wealth management. Credit Suisse hired more than 50,000 as of the end of last year, according to its website.
It recently updated top management after five profit warnings in the last six quarters, saying that its legal counsel, chief financial officer, and head of Asia would all be either resigning or abandoning the company. The Swiss lender also named current Bank of Ireland chief Francesca McDonagh as head of the Europe, Africa, and Middle East region starting next September.
Even before Wednesday’s warning, the bank had been straining to keep up with competitors’ trading results after lowering risk because of Archegos. Equities revenue fell 47% in the first quarter while the fixed income business, normally a source of strength, did even poorly.
Results revealed the other severe challenges still facing the bank as it tries to win back investor confidence, including poorer-than-expected wealth management results and still-to-come legal hits. Beyond the bank’s self-caused damage, Gottstein is competing with numerous macro factors outside his control that further risk hindering the recovery.
Wealthy investors, especially in the Asia Pacific region, are ignoring the volatility in markets, weakening fees for the private bank. Covid lockdowns in the region are resuscitating fears of supply chain disruptions, while M&A activity has taken a blow after Russia invaded Ukraine.