Swiss bank Credit Suisse today detailed its recovery plan to overcome its serious financial and reputational problems. Switzerland’s second largest financial institution has announced that it will undertake a “radical restructuring” of its investment banking business. The plan also involves reducing costs, with the cut of 2,700 jobs in the fourth quarter, and two capital increases with which it plans to raise 4,000 million Swiss francs (4,031 million euros).
In this sense, the entity has achieved the commitment of Saudi National Bank to acquire 9.9% of the share capital for 1,500 million francs (1,510 million euros). With this operation, the bank intends to diversify its shareholder base and stop its bleeding on the stock market -the price of its shares has been halved in a year and this Thursday they continue to fall sharply-.
The latest results presented by the financial institution for the third quarter show losses amounting to 5,900 million francs (5,946 million euros) in the first nine months of the year. A figure that contrasts with the net profit of 434 million francs (437 million euros) recorded in the same period last year.
“The third quarter, and more broadly so far in 2022, has been significantly affected by persistently difficult macroeconomic and market conditions, leading to weaker performance for our investment bank in particular,” Ulrich said. Körner, CEO of Credit Suisse, while admitting that the entity’s recent performance “has been disappointing.”
Among the measures to improve these figures, Credit Suisse intends to reduce risk assets by 40%. To do this, it will create a unit to free up capital through the liquidation of non-strategic, low-return and higher-risk businesses. In this regard, it has announced the sale of a significant part of its securitized products business to the investment group led by Apollo Global Management. Likewise, the bank will create an associated entity for capital markets, CS First Boston, with the aim of attracting capital from third parties and boosting its advisory activity.
On the other hand, the bank plans to reduce its cost base by 15%. To this end, it will carry out a cut of 2,700 jobs in the fourth quarter, 5% of the workforce, although the entity has already begun to implement cost reductions in the middle of this year. In this way, it expects to operate by the end of 2025 with some 43,000 full-time employees, which is equivalent to a reduction of 9,000 jobs. The restructuring of the entity is intended to be financed through divestments, exits, capital actions and existing resources.
