Credit Suisse launches radical overhaul to stabilise bank
Oct 27, 2022 - 01:17 PM
GENEVA, SWITZERLAND — Credit Suisse announced a radical series of measures Thursday aimed at turning around the beleaguered bank following huge third quarter losses, including revamping its investment banking unit, 9,000 job layoffs and raising fresh capital.
Switzerland’s second-biggest bank launched a strategic review aimed at putting an end to a series of scandals that have shaken the institution, saying the results were intended to create “a simpler, more focused and more stable bank”.
The Zurich-based bank said it was going for a “radical restructuring” of its investment bank, an accelerated cost-cutting effort, and strengthened and reallocated capital, “all of which are designed to create a new Credit Suisse”.
The bank intends to raise capital worth four billion Swiss francs ($4 billion) through the issuance of new shares to qualified investors, including Saudi National Bank, which has committed to invest up to 1.5 billion Swiss francs to achieve a shareholding of up to 9.9 percent.
“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.
He said the reassessment of the bank’s future direction included “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”.
Lehmann said the bank will also work on further improving risk management and control processes across the entire bank, after a series of investments turned sour.
“I am convinced that this is the blueprint for success, helping rebuild trust and pride in the new Credit Suisse.”
Credit Suisse also said expects to run the bank with approximately 43,000 staff by the end of 2025 compared to 52,000 at the end of September, “reflecting natural attrition and targeted headcount reductions”.
The announcement came as the bank unveiled a third quarter net loss of $4.034 billion Swiss francs.
“This is a historic moment for Credit Suisse. We are radically restructuring the investment bank to help create a new bank that is simpler, more stable and with a more focused business model built around client needs,” new chief executive Ulrich Koerner said in a statement.
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