Credit Suisse has revealed sweeping plans to cut 9,000 jobs and raise billions of pounds from investors in a Saudi-led funding round, as part of an overhaul of the company aimed at drawing a line amid a series of scandals and helping it recover from a slump of pounds. 3.5 billion loss.
The announcement comes after months of speculation about the scale of the change scheduled under his new boss, Ulrich Koerner, who has been tasked with shrinking the investment bank and cutting costs.
Credit Suisse chiefs hope investors will give the green light to plans to raise CHF4 billion (£3.5 billion), including CHF1.5 billion from the Saudi National Bank (SNB), next month. The move will give the Saudi bank a 9.9% stake, making it the second largest investor after US investment group Harris Associates.
Credit Suisse’s share price fell 12% after the announcement.
Switzerland’s second-largest bank said it would lay off 2,700 full-time employees, which is about a third of the planned cuts and a fifth of its 52,000 employees globally.
It expects the total number of employees to shrink to 43,000 by the end of 2025, through a combination of more job cuts and natural attrition, meaning it will not replace employees when they leave the bank. The lender would not confirm how many 5,500 UK employees might be affected.
“This is a historic moment for Credit Suisse,” Korner said. “We are radically restructuring the investment bank to help create a new, simpler and more stable bank with a more focused business model built on customer needs.”
The restructuring plans – which will focus more on the bank’s asset management division for wealthy clients – are expected to cost around CHF2.9 billion over the next year. This will be financed by dumping some of its investments, selling parts of its business, and raising new money from investors.
The Saudi National Bank said it intended to participate in raising funds “to support the establishment of an independent investment bank focused on advisory and capital markets activities.”
If approved, it would add another Middle Eastern investment vehicle to the bank’s list of major shareholders, which includes the Qatar Investment Authority and the private investment firm Olayan Group, which has links to Saudi Arabia.
Credit Suisse also confirmed that it will continue to form its investment bank as it tries to raise more liquidity.
This will include selling part of its securitized products business – which buys and sells investment products backed by asset groups such as mortgages, credit card debt and auto loans – to US investment groups Pimco and Apollo.
It will also join a portion of its investment bank, which will be operated under the CS First Boston brand. Credit Suisse said the business would be “more global and broader” than most boutique firms, but would have a “more focused” approach than big investment banking competitors, including UBS and Goldman Sachs.
Credit Suisse President Axel Lehmann said that while the investment bank has built a “strong and respectable” business over its 166-year history, it has become “defocused” in recent years.
“For several months, the Board of Directors and the Executive Board have been assessing our future direction, and in doing so, we believe we have left no stone unturned,” he added.
The reform comes after a series of scandals in recent years. Credit Suisse was implicated in the collapse of lender Greensill Capital and US hedge fund Archegos Capital in 2021. That year, it also admitted defrauding investors as part of the Mozambique “tuna bond” loan scandal, resulting in a fine of more than £1. 350 m.
This year, Swiss prosecutors found the bank guilty of aiding money laundering on behalf of the Bulgarian mafia. The bank denied any wrongdoing and said it would appeal the ruling.
Credit Suisse has also come under fire after the Switzerland Secrets investigation, which showed it had served clients involved in torture, drug trafficking, money laundering, corruption and other serious crimes for decades.
“The new Executive Board is focused on restoring confidence through the aggressive and responsible implementation of our new strategy, where risk management remains at the heart of everything we do,” Korner said.
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