Credit Suisse Group AG is considering new headcount reductions as part of a new push to reduce costs after warning of losses in the second quarter, people familiar with the matter said. increase.
People said Swiss banks are considering headcount reductions across departments, including investment banks and wealth management in multiple regions, and urged that the problem not be identified as private. Stocks fell 7.6% and traded near their lowest levels in 30 years.
People said they are likely to be fired as banks are preparing to keep investors up-to-date on risk, compliance, technology and wealth management on June 28. The final tally of the cuts has not yet been determined, they said. A spokeswoman for Credit Suisse declined to comment, pointing out a statement by the lender on Wednesday. He said this would accelerate cost-cutting efforts.
Banks have warned that investment banking and trading slumps are expected to result in losses for the third consecutive year in the quarter. Credit Suisse has pointed out widening credit spreads and de-leveraging clients in volatile markets, but other banks say volatility has benefited trading desks.
Citigroup analysts, led by Andrew Coombs, said Wednesday that “today’s profit warnings have accused” the current geopolitical situation “and” significant monetary tightening, “but CS’s plight is largely self-sufficient. Claims that it may be a self-harm. ”
CEO Thomas Gottstein’s two-year charge has been a $ 5.5 billion blow by Alkegos, the collapse of partner Greensill Capital, a loss of investor confidence, a weakening of key businesses and talent. I’ve seen a series of profit warnings that prompted the outflow. Lenders say 2022 will be a transitional year as they seek to mitigate investment banking risk while shifting resources to asset management.
Swiss lenders had about 51,000 employees at the end of March. Recently, the chief financial officer, legal counsel, and Asian executive have all resigned or resigned from the company, renewing management. He has also appointed former Bank of Ireland group Plc Francesca McDonagh to head the Europe, Middle East and Africa region.
Even before Wednesday’s warning, banks struggled to keep up with rival trading results after reducing risk for Arquegos. Equity earnings fell 47% in the first quarter, but the fixed income business, which is usually the source of power, worsened. The results reveal other urgent challenges that banks still face as they seek to regain investor confidence.
Beyond the bank’s self-harm damage, Gottstein is fighting a number of macro factors beyond his control that further increase the risk of impeding recovery. Wealthy investors, especially in the Asia-Pacific region, are reducing market volatility and damaging private bank fees. While M & A activities have been hit after Russia’s invasion of Ukraine, the blockade of Covid in the region has revived fears of supply chain disruption.
The problem these days is in stark contrast to the message from investment banks and capital market manager David Miller. David Miller tells clients this year that banks are “back” ready to undertake transactions.
Credit Suisse said Wednesday that the advisory fees generated by Miller’s dealmakers are “resilience”, but that low levels of debt and equity issuance could cause investment banks to lose this quarter. ..
