Credit Suisse also aims to consolidate its London estate, which includes five locations across the city, by sub-letting a few sites as well as offshoring staff.
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A few analysts noted that Credit Suisse’s planned investment banking cuts, which will reduce the amount of risk- weighted assets in the unit by about a fifth, will disappoint those expecting the same dramatic restructuring completed at rival UBS Group AG.
The much anticipated change of direction under Tidjane Thiam, the former CEO of Prudential PLC who joined Credit Suisse in July, draws a line under the Swiss lender’s long standing efforts to become one of the world’s biggest investment banks.
The global financial services company announced plans to raise 6 billion Swiss francs, or $6.3 billion, from investors through share issue, as well as its intention to shrink its investment bank and cut jobs. The company’s strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income and attractive valuation levels.
In concrete terms, the bank aims to save 3.5 billion Swiss francs ($3.7 billion, 3.2 billion euros) by the end of 2018 by, among other things, cutting loose a significant number of the a few 60,000 people it employs globally.
The firm’s investment banking division was among the hardest hit, with a pre-tax loss of 125 million francs ($130 million) in the third quarter, a sharp decline from 516 million francs ($540 million) earned over the same period past year. “This translated into lower profits and was particularly visible in our fixed income sales and trading performance”.
Credit Suisse’s plan to raise about 6.05 billion francs, or roughly $6.3 billion in new capital was roughly in line with analyst expectations.
Thiam said in a statement: “We are also taking decisive action to strengthen our balance sheet and capital position to the point where it will not be any more a source of concern for our clients, our investors or our regulators”. Additionally, Credit Suisse also announced a raft of changes, including changes to the top management, naming six new board members, and a partial flotation of its Swiss Universal Bank by 2017. “Out of the 4,200 about 2,400 are directly connected to the front office so they need to be co-located with the front office”, Thiam said at a press conference on Wednesday.
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Thiam had hinted at the possibility of a capital raising in an interview with CNBC shortly after he was appointed.
