Credit Suisse will cut another 1,500 jobs and scale back its capital-guzzling investment banking business as it seeks to meet tough new regulations, it said today after reporting disappointing third-quarter results.
The job losses come on top of 2,000 cuts announced by the Swiss bank in July out of a total of about 50,700, aimed at saving an annual 1 billion francs (€850 million). It said the new cuts should bring cost savings to 2 billion francs by 2013.
Banks are shedding jobs worldwide as stricter regulations and a tough third quarter for trading income take their toll on investment banking divisions in particular.
Japan's Nomura Holdings , which posted its first quarterly loss in two years today, also increased its cost cutting target.
Credit Suisse Group AG shares traded 8.7 per cent lower at 23.37 francs, compared with a 5.1 per cent drop in European banks as a whole after Greece called a referendum on the latest eurozone bailout deal.
"The results are worse than those of UBS and Deutsche Bank
The cuts will further reverse Credit Suisse chief executive Brady Dougan's post-crisis hiring spree focused on fixed income, the area hit most by the market downturn this year.
Dougan told Reuters Insider television the cuts would hit all regions and units, including its private bank. "It is an indicator of the direction the industry has to go," Mr Dougan said.
Switzerland's other big bank UBS said in August it was slashing 3,500 jobs to shave 2 billion francs off annual costs and is expected to announce more cuts at an investor day on Nov. 17, when it is due to detail an investment bank overhaul.
CS said net profit rose 12 per cent to 683 million francs, missing a Reuters poll estimate for 1.1 billion. "Weaker than expected results, strategy refinement could lead to improved business over time," said analyst Teresa Nielsen at banking group Vontobel in a client note.
In line with other banks this quarter, the Credit Suisse numbers were flattered by a 1.34 billion franc accounting gain on the value of its own debt - which occurs because the bank could profit from buying back its own bonds at lower levels.
Stripping it out, underlying net profit was 441 million francs, above average analyst expectations for 258 million.
The investment bank reported a pretax loss of 190 million against a 231 million profit in the second quarter, as it was hit by challenging market-making conditions and continued low client activity as the macroeconomic climate deteriorated.