Trouble looms in a top Swizz bank, Credit Suisse as they battle a huge slump in revenue in investment banking as cost cutting measures could lead to about 2,000 job loss. Switzerland’s second-biggest bank said on Wednesday it would shave a further 800 million Swiss francs ($821 million) off costs and cut 2,000 more jobs from its Global Markets division.
The bank is set to record a 40 to 45 percent drop in first-quarter revenues and is selling off holdings of illiquid assets that the bank’s senior management had not had on its coffers.
The bank’s Chief Executive Tidjane Thiam admitted he had been unaware of trading positions that prompted more big write-downs in the first quarter. He said: “We have gone back to that decision-making process and there has been consequences internally for a number of people”, adding he did not want to call names but that the bank was now confident the problems had been identified”.
According to the bank, job cuts would come mostly in London and New York. The latest cuts bring the total to 6,000 job losses announced by Thiam, who took over last year.
Thiam said that write-downs at Global Markets, which totalled $633 million in the fourth quarter of 2015, were lower in the first quarter at $346 million as of March 11, 2016.On a brighter note, the bank cited net new money inflows so far this year of 3.6 billion francs at its Asia Pacific business, 7.1 billion at international wealth management, and 4.5 billion at its Swiss universal bank, whose partial public listing in 2017 was on track if market conditions permit.
The first quarter is normally the most lucrative period for the industry, when investors put their money to work at the start of the year, but this year revenues have been hit by record low interest rates, low commodity prices and slower growth in emerging markets.
Rival Deutsche Bank’s (DBKGn.DE) finance chief said on Tuesday the first two months of 2016 were the worst start to a year for banks that he has seen in his banking career.
