Credit Suisse (NYSE:CS), a Swiss banking giant, may lay off more than 10% of its staff associated with the European investment banking sector, the Financial Times (FT) reports. The financially troubled entity allegedly made hundreds of job cuts already in December, primarily at its London and Zurich offices.
Credit Suisse and Alleged Layoffs
According to FT, which cites people with knowledge of the moves, the latest action implements the plan announced in October. At the time, the Swiss lender said it wanted to reduce its workforce of 52,000 by approximately 9,000 over the next three years.
Although the entire investment banking industry is currently in crisis, Credit Suisse is feeling it most acutely. A few months ago, the giant suffered from widespread client withdrawals after media rumors were circulated undermining the company’s financial health. Within three weeks, wealth management clients withdrew $68 billion, which is 10% of the company’s assets under management.
Last month, 2,700 Credit Suisse employees were expected to lose their jobs, 740 of them from offices in Switzerland (540) and London (200). Talks regarding the current round of job cuts reportedly began before Christmas, but a final decision to their extent is not expected until next month.
Q4 Ended with a Loss of $1.58 Billion?
Analysts now expect CS to report a second consecutive year of net loss next month. The company’s most recent report, published in October 2022 for the three months ended September 2022, showed a very sharp decline in net income and a loss of $4 billion. The net loss was seven times higher than analysts’ forecasts.
Along with the release of the results, Credit Suisse cited the need to strategically change its existing strategy, including raising $4 billion in additional capital and cutting its workforce significantly.
Credit Suisse published a trading update in late November, forecasting a pre-tax loss for the fourth quarter of the ongoing fiscal year at $1.58 billion. The company’s share price reflects the problems and weak financial forecasts. In 2022, CS lost nearly 70% on Wall Street, falling below $3 per share.
Experts agree that Credit Suisse’s current problems are among the biggest in the company’s 166-year history. A series of recent scandals have badly damaged the bank’s reputation, including a $5.5 billion loss in connection with the collapse of U.S. investment firm Archegos.
Bad Times for Investment Bankers, Worse for Credit Suisse
While Credit Suisse’s problem seems the most serious, the Swiss giant is not alone. The entire investment banking industry is currently trading under the water, with its revenues hit by rising interest rates.
The pandemic has caused many large companies to increase their headcount over the past two years dynamically, and they are now forced to make severe cuts. Goldman Sachs is one of them, planning to lay off more than 3,000 employees.
Earlier, the institution suggested that the cuts would be as high as 8%, translating into 4,000 positions. But, the final reduction will be smaller due to decisions made by senior management who were asked last year to identify cost-cutting opportunities.
Original article: https://www.financemagnates.com/institutional-forex/credit-suisse-starts-job-cuts-goes-after-european-investment-bankers
