In addition to the 9,000 job cuts, the Swiss lender’s business overhaul includes raising around CHF4bn ($4.06bn) capital, reducing operational costs, and spinning off its investment banking unit
Credit Suisse announces business overhaul. (Credit: Jamcib/Wikipedia)
Credit Suisse Group is set to reduce 9,000 jobs, as part of the strategic transformation of its organisational structure, after a series of lawsuits, and settlements, and was hit by a loss of £3.5bn in the third quarter.
The announcement follows a strategic review conducted by the company’s Board of Directors and Executive Board.
In addition to the 9,000 job cuts, the business overhaul also includes the Swiss lender raising around CHF4bn ($4.06bn) capital, reducing costs, and spinning off its investment banking unit.
Credit Suisse Board of Directors chairman Axel P Lehmann said: “Over 166 years, Credit Suisse has built a powerful and respected franchise but we recognise that in recent years we have become unfocused.
“For a number of months, the Board of Directors along with the Executive Board has been assessing our future direction and, in doing so, we believe we have left no stone unturned.
“Today we are announcing the result of that process – a radical strategy and a clear execution plan to create a stronger, more resilient and more efficient bank with a firm foundation, focused on our clients and their needs.”
The company will raise the capital partly through the issuance of new shares to investors, including Saudi National Bank, and partly through the issue of rights to existing shareholders.
Saudi National Bank has agreed to invest up to CHF1.5bn to obtain up to a 9.9% stake.
Credit Suisse is already underway to cut 2,700 full-time-equivalent jobs in the fourth quarter this year, which represent 5% of the group’s workforce.
Its workforce will be reduced by around 9,000 by the end of 2025, to around 43,000 full-time-equivalent staff, from around 52,000 at the end of September.
The company aims to reduce its costs by around CHF2.5bn, which represents around 15%, to reach around CHF14.5bn in 2025.
As part of the restructuring, Credit Suisse will separate its Investment Bank unit into a new company, dubbed CS First Boston, which will attract third-party capital.
In addition, Credit Suisse has agreed to transfer a part of its Securitized Products Group (SPG) and other businesses to an affiliate of Apollo Global Management.
SPG is a provider of full-service, vertically integrated credit solutions to a range of incumbent and emerging lenders across real estate, consumer, and other asset classes.
The affiliates of Apollo and PIMCO will acquire the majority of SPG’s assets and other related financing businesses and manage the remaining assets on behalf of Credit Suisse.
Credit Suisse Board of Directors chairman Axel P Lehmann said: “In July, we announced our intention to bring third-party capital to our Securitized Products Group as part of our broader strategic review.
“We have been delighted by the broad interest in this high-quality franchise and are pleased to partner with Apollo and PIMCO on the next stage of its growth.”