Credit Suisse expects to post another loss in Q1

Mr Thiam said Credit Suisse may post a net loss in the first quarter. He said that he asked for a 40 per cent cut in his variable pay. Credit Suisse is now targeting 6,000 job cuts in 2016. The bank has already eliminated some 2,800 positions as part of t
Credit Suisse is now targeting 6,000 job cuts in 2016. The bank has already eliminated some 2,800 positions as part of the plan this year. PHOTO: EUROPEAN PRESSPHOTO AGENCY
Mr Thiam said Credit Suisse may post a net loss in the first quarter. He said that he asked for a 40 per cent cut in his variable pay. Credit Suisse is now targeting 6,000 job cuts in 2016. The bank has already eliminated some 2,800 positions as part of t
Mr Thiam said Credit Suisse may post a net loss in the first quarter. He said that he asked for a 40 per cent cut in his variable pay. PHOTO: EUROPEAN PRESSPHOTO AGENCY

Bank to reduce costs further at securities unit and cut more jobs

ZURICH • Credit Suisse Group chief executive officer Tidjane Thiam forecast another loss in the first quarter as he pledged to accelerate restructuring through deeper cost cuts at the securities unit and cutting an additional 2,000 jobs.

Announcing the second round of restructuring in five months yesterday, Mr Thiam said the bank may post a net loss in the first quarter.

Trading revenue is seen dropping as much as 45 per cent in the first quarter, with the bank looking to cut risk-weighted assets in that business by another 20 per cent to about US$60 billion (S$82 billion) this year.

Credit Suisse is now targeting 6,000 job cuts in 2016.

Mr Thiam, 53, has pledged to focus on wealth management to tap growth across Asia while shrinking the securities business, which helped contribute to the bank's biggest quarterly loss in seven years in the three months through December. His restructuring plans, announced in October, have so far failed to convince investors, with shares losing about 41 per cent of their value in that period.

Mr Andreas Venditti, an analyst at Vontobel, told Bloomberg: "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."

The bank's shares rose 1.9 per cent to 14.59 francs (S$20.48) at 11.10am in Zurich. They have dropped about 33 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 francs in 2017. It 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 as part of the plan this year, with every division contributing to cost cuts, it said. Job cuts will help achieve gross savings of 1.7 billion francs this year.

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, Bloomberg reported.

At Deutsche Bank, co-CEO John Cryan said earlier this month that he does not expect to post a profit this year as he eliminates thousands of jobs and sells assets as part of an overhaul. Barclays has also scaled back its securities unit.

Bonuses at global markets were cut by about 35 per cent in 2015. Mr Thiam said on a conference call that he asked for a 40 per cent cut in his variable pay.

Credit Suisse plans to exit most of the distressed credit, European securitised product trading and long- term illiquid funding, while equities will remain "a core area of focus". The bank said it will take more than US$200 million in writedowns in the first quarter as it is selling some credit positions.

It said it would sell businesses and assets worth at least 1 billion francs and assess more carefully where to invest to bolster capital ratios.

The bank had said it continues its solid performance in the Asia Pacific (Apac), with the region delivering stable growth and momentum to the bank. Close collaboration between private and investment banking is strengthening the Apac division, the bank had said, adding that it is attracting talent from across the region.

A version of this article appeared in the print edition of The Straits Times on March 24, 2016, with the headline 'Credit Suisse expects to post another loss in Q1'. Print Edition | Subscribe