Credit Suisse to cut more jobs, speed up trading reductions

Credit Suisse Group AG plans to eliminate an additional 2,000 jobs this year and deepen cuts at the investment bank, five months after Chief Executive Officer Tidjane Thiam announced an overhaul of the Swiss lender to focus on wealth management. The shares jumped.

The bank plans to cut risk-weighted assets in global markets, which houses securities trading, to about $60 billion this year, compared with a previous target of between $83 billion and $85 billion, it said in a statement on Wednesday. The unit is projected to post a loss in the first quarter. Credit Suisse is targeting 6,000 job cuts this year, with a gross savings of 1.7 billion francs ($1.7 billion).

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• Red faces

Thiam, 53, announced tougher cuts at the securities business as he's seeking to stem a slump in shares, which eroded about 41 per cent of the bank's value since he presented his overhaul to investors in October. At Deutsche Bank AG, Europe's largest investment bank, co-CEO John Cryan said last week that he doesn't expect to post a profit this year.

"This accelerated restructuring move comes at the right time and should be positively received as it addresses some key criticism from shareholders that the investment bank still is too big," said Andreas Venditti, an analyst at Vontobel, who has a hold rating on the stock. He said the first quarter performance at the securities unit has been "dismal."

The shares rose 3.7 per cent to 14.85 francs at 9:02 am in Zurich. They have dropped about 32 per cent this year, reaching the lowest since 1989 last month.

As part of its latest overhaul, Credit Suisse expects restructuring costs to peak at 1 billion francs this year, before dropping to 600 million in 2017. The bank is targeting net cost savings of at least 3 billion francs by 2018, up from 2 billion francs, while costs at global markets will be cut to 5.4 billion francs from 6.6 billion francs at the end of last year.

The bank has already eliminated some 2,800 positions this year, with every division contributing to cost cuts, it said. Some of Europe's largest banks have cut their trading businesses as regulators step up scrutiny of riskier activities, while a slump in energy costs and cooling emerging-market growth eroded revenue.

At Deutsche Bank, Cryan announced plans to scrap dividends, eliminate thousands of jobs and dispose of assets to shore up profitability. Barclays Plc has also scaled back its securities unit.