Credit Suisse accelerates cost and job cuts

Credit Suisse has announced plans to cut 2,000 jobs in its global markets business and ramp up its cost cuts as it combats low interest rates and oil prices and a slowdown in China.

The Swiss bank, which said last month that it would be axing 4,000 jobs, now plans to cut at least CHF4.3bn in costs by 2018, up from its previous target of CHF3.5bn, and sell at least CHF1bn in unspecified businesses and assets.

The company also said on Wednesday that 2,800 of the 6,000 job cuts have been actioned year to date.

Chief executive Tidjane Thiam said: “Regarding our global markets activities, the combination of a high and inflexible cost base, exposure to illiquid inventory in fixed income, historically low levels of client activity and challenging market conditions has led to disappointing financial results.

“In this context, we have taken immediate action to reduce outsized positions in activities not consistent with our new strategy and systematically reduced our exposures.”

Tidjane said write-downs were $633m in the fourth quarter of last year and were lower in the first quarter of 2016 at $346m as of 11 March. He said revenues have remained weak in the period, with negative operational leverage.

The bank said it will reduce risk-weighted assets in its global markets division to $60bn by the end of the year compared with the $83bn to $85bn targeted in October.

Credit Suisse update the market on its performance in the first quarter, noting net inflows of CHF4.5bn in the Swiss private bank and CHF3.6bn in Asia Pacific.

It also saw net inflows of CHF7.1bn in international wealth management, with revenues in Asia Pacific investment banking down compared with what it called an exceptional 2015.

RBC Capital Markets said it was positive that CS is taking more action on costs and reducing RWAs in global markets.

It also said “the fact that net new money is up in APAC and Switzerland versus Q4 is encouraging”.

At 0842 GMT, Credit Suisse shares were up 0.9% to CHF14.45.