Credit Suisse to shed 5,300 employees after $2.5 billion loss in first two months of Q4

05 December 2008

Swiss banking giant Credit Suisse said yesterday that it will cut roughly 5,300, or 11 per cent, of its jobs after posting a loss of around 3 billion Swiss francs ($2.5 billion) for the first two months of the fourth quarter. The Zurich-based bank also decided to scrap bonuses for its top executives.

Most of the job cuts will come in the group's investment-banking arm, where it is also sharply cutting its risk exposure and reducing or eliminating trading activities in certain sectors. The bank said the job losses and other cost cuts should save around 2 billion francs.

Shares in Switzerland's second-largest bank fell as much as 6 per cent in early trading before rebounding to trade almost 8 per cent higher as investors welcomed the move to slash costs and risk, while refocusing on the high-margin wealth management business.

Around two-thirds of the job cuts will be in investment banking, though all divisions will experience some cuts. There's also likely to be a higher concentration of cuts in the US than elsewhere, because of the investment banking operations in the country, said CEO Brady Dougan on a conference call with analysts.

''The strategic steps we are outlining today will further reinforce the strong position of Credit Suisse from a risk, cost, capital and earnings perspective," Dougan said in a statement. "These actions will better position us to weather the continuing challenging market conditions, capture opportunities that arise amid the continuing disruption, and prosper when markets improve.''

Dougan, Chairman Walter Kielholz and Paul Calello, head of the investment bank, will forgo bonuses for 2008 after about 5.2 billion francs in net losses so far this year. Today's announcement brings the total number of job cuts at Credit Suisse to 7,390, compared with 9,000 at UBS.