Credit Suisse plans job cuts after profits fall short again

CREDIT Suisse is braced for a fresh round of job cuts after it announced its third profit warning this year, blaming challenging market conditions and Russia’s invasion of Ukraine.

The Zurich-based bank is considering a reduction in headcount across several divisions, including investment banking and wealth management, in different regions as part of a drive to cut costs, reported Bloomberg.

Credit Suisse said that “the year 2022 will remain one of transition” for the bank, as it looks to recover from a series of setbacks.

It is the third consecutive quarter of losses for Credit Suisse. In the fourth quarter of last year, the bank posted negative returns of 2bn Swiss francs (£1.6bn), while the first three months of this year got off to a rocky start when the bank said it had set aside 600m francs to cover legal costs.

The reserves are likely earmarked for damages incurred from a long-running dispute with Bidzina Ivanishvili, the former prime minister of Georgia, who alleges he was a victim of fraud committed by Pascale Lescaudron, a former Credit Suisse banker.

Lescaudron received a prison sentence of five years in 2018 after confessing to forging client signatures and diverting funds to place stock bets without their knowledge. The 54-year-old took his own life in 2020.

In March, a court in Bermuda found in favour of Mr Ivanishvili, and ruled that he and his family were due damages in excess of $500m (£385m).

Credit Suisse did not reveal the extent of its projected losses in the second quarter, but attributed their difficulties to a range of external factors.

A spokesman said: “The combination of the current geopolitical situation following Russia’s invasion of Ukraine, significant monetary tightening by major central banks in response to the substantial increase in inflation and the unwind of Covid-related stimulus measures have resulted in continued heightened market volatility, weak customer flows and ongoing client deleveraging, notably in the APAC region.”

The bank added that “higher volatility, together with continued low levels of capital markets issuance and the widening in credit spreads, have depressed the performance of [the investment banking] division in April and May”.

As a result, Credit Suisse has decided to “accelerate” its cost initiatives “with the aim of maximising savings from 2023 onwards”, explained the spokesman.

Further details will be provided at an investor day on June 28.