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Credit Suisse's cuts are bigger than expected, but not everyone will be on the street.

Credit Suisse is cutting 9,000 jobs

A few months ago, it was mooted that Credit Suisse would be cutting 5,000 jobs. That seemed like a lot. Today it's become apparent that it was an understatement. In its announcement of its restructuring this morning, Credit Suisse says it will in fact be doing away with 9,000 people.

It won't happen all at once and it won't all be in the investment bank, but the investment bank will surely bear the brunt of the pain.

Credit Suisse plans to cut its overall headcount from around 52,000 at the end of the third quarter to 43,000 by the end of 2025. 

Not all the cuts will involve people being ejected onto the street. The securitized products group is being purchased by Apollo Global Management, and its staff will go there. The capital markets and advisory business is being spun out into a new and independent bank, CS First Boston and its staff will go there. But Credit Suisse is also cutting 2,700 people from across the bank (5%) of the total in the fourth quarter. 

As the remaining 6,300 people are cut over the next three years, the bank plans to make the most of "natural attrition" and will presumably not be replacing people who leave. It says it intends to practice, "organizational simplification, workforce management and third-party cost management." As part of the latter strategy, it will be cutting consultancy spend by 50% and spend 30% less on contractors. 

The bank isn't explicit about what will happen to jobs in the global markets business. However, risk weighted assets (RWAs) are being cut by 40% in line with the reduction in headcount, which suggests that it's probably time to look for a new job if you're on a capital-intensive desk. The bank says its future markets business, "will include the strongest and most relevant aspects" of its trading capabilities. Unsurprisingly, it also states that the markets business will be "closely aligned" to wealth management and the Swiss bank franchise, while "remaining fully committed to serving institutional clients." Markets will also be reframed as "a solutions provider to third party wealth managers," and will work with the newly independent bankers in CS First Boston.

News of the cuts comes as Credit Suisse announces its results for the third quarter of 2022. The investment bank made a loss of CHF666m during the quarter and has made a loss of CHF1.7bn year-to-date. The losses imply that staff at the bank will have previous year's bonuses clawed back under Credit Suisse compensation rules. As the chart below shows, Credit Suisse's salespeople and traders substantially underperformed rivals in the first nine months of this year. Revenues in the advisory and capital markets business that will become first Boston fell 82% over the period, which doesn't suggest an auspicious start to independence. 

One banker who recently left Credit Suisse said he cried when he departed. "I love the place. It's just a shame that it has become a shadow of what it was," he told us.

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AUTHORSarah Butcher Global Editor
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  • pb
    pbug56
    29 October 2022

    Of course, get rid of some MD's and executives, etc. and that would save at least as much money and probably make the firm work better.

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