Credit Suisse announces ‘radical restructuring’ to create a ‘more stable bank’; to slash 9,000 jobs

After incurring huge third quarter losses, Credit Suisse has announced a string of radical measures to turn around the fate of the bank. It plans to revamp its investment banking unit and will also slash 9,000 jobs, besides raising fresh capital. Switzerland’s second-biggest bank has launched a strategic review which intends to create “a simpler, more focused and more stable bank”.

“Over 166 years, Credit Suisse has built a powerful and respected franchise but we recognise that in recent years we have become unfocused,” chairman Axel Lehmann said in a statement.

“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” are the focus areas, Lehmann said.

The Zurich-based bank announced plans for a “radical restructuring” of its investment bank, an “accelerated cost-cutting effort”, and “strengthened and reallocated capital”. It said that “all of it are designed to create a new Credit Suisse”.

It also intends to raise capital worth four billion Swiss francs ($4 billion) through issuing new shares to qualified investors, including Saudi National Bank. The latter has committed to investing up to 1.5 billion Swiss francs to gain a shareholding of up to 9.9 per cent.

The bank had earlier announced a third quarter net loss of 4.034 billion Swiss francs.

Credit Suisse shares slid on the announcements, opening down 7.26 per cent on the Swiss stock exchange’s main SMI index at 4.417 Swiss francs.

Meanwhile, it is nearing a deal to sell its securitized-products group to investors Apollo Global Management and Pacific Investment Management Co, Reuters reported.

The consortium including Pimco, a big bond manager, and Apollo, a large alternative asset manager, beat out a group comprised of Centerbridge Partners and Martello Re Ltd., a life and reinsurance company, the WSJ report added.