Credit Suisse’s New Boss Could Axe 2,900 Investment Bank Jobs – Analysts

Posted by Anton Murray Consulting on 12 Mar, 2015

Steve Slater 

Credit Suisse’s (CSGN.VX) next chief executive, Tidjane Thiam, could cut almost 3,000 jobs from its investment bank, or 15 percent of staff, as part of a shift of capital away from trading desks to private banking in Asia, analysts said.

Thiam is expected to cut 150 billion Swiss francs (98 billion pounds) of assets from the bank’s fixed income, commodities and currencies (FICC) business and focus more on private banking in Asia, analysts at JPMorgan said.

He might also cut the number of staff in the investment bank by 2,900 to about 16,500 to save costs, JPMorgan analyst Kian Abouhossein said in note to clients on Wednesday.

Credit Suisse said on Tuesday Thiam, the chief executive of UK insurer Prudential (PRU.L), would take over from current CEO Brady Dougan after Dougan leaves in June.

Dougan has been criticised for not cutting back the investment bank hard enough, leaving it more reliant on trading revenues than domestic rival UBS (UBSG.VX) and most other European banks.

“With new management comes the potential for a new strategy. Given the incoming CEO’s background, we expect an emphasis on asset-based annuity income streams (wealth management), probably a focus on emerging markets, and a further reduction in the investment bank,” said Matt Spick, analyst at Deutsche Bank.

Credit Suisse has cut the size of its investment bank by 22 percent in recent years, below the 56 percent reduction at UBS and also less than the cuts at Barclays (BARC.L) (37 percent) and Deutsche Bank (DBKGn.DE) (28 percent), according to Goldman Sachs.

Cutting investment bank assets would address concerns about capital strength, leverage and Credit Suisse’s reliance on volatile investment bank revenues, analysts said.

Daniele Brupbacher, analyst at UBS, said Credit Suisse could need a share issue and estimated that accelerating and deepening cuts in the investment bank could improve its core capital adequacy ratio to assets by up to 1.5 percentage points.

Banks remain under pressure from tougher rules that have forced them to hold more capital to cover potential losses in trading activities, making those businesses less profitable.

Switzerland has said its big two banks should also have higher leverage ratios than rivals, adding pressure on Thiam to cut trading desks.

Abouhossein, who raised his rating on Credit Suisse stock to ‘outperform’ from ‘underperform’, estimated Thiam will cut the capital allocated to the investment bank to 39 percent of the bank from 53 percent.


Latest market insights

Funds turn to non-traditional sectors amid commercial property downturn

› Read more

Magellan completes board renewal process with new appointment

› Read more

Aussie super funds rise in global pension fund rankings

› Read more

Rest Super commits to ‘operate and scale’ renewable energy assets

› Read more

‘Urgent need’ for super funds to improve experience of members

› Read more

Twitter feed

Our client is seeking a Senior Business Analyst to work in their risk & compliance project team. Ideally you will be in Melbourne, but our client can accommodate a Sydney-based applicant on this 12-month contract:

A well-regarded regional asset manager is seeking a Senior Fund Accountant to support their growing Singapore office:

A leading US asset manager with a well-established Singapore office is seeking a Client Executive for their relationship management team:

A global financial institution is seeking a Dealers Assistant to join their Wealth Management/Stockbroking Department in their Perth Office:

Sign up to our newsletter

Sign up to our newsletter

"*" indicates required fields

By subscribing to our newsletter I agree to the collection, use and disclosure of my personal information in accordance with our Privacy Policy