GENEVA – Credit Suisse is cutting roughly 4,000 jobs to reduce costs after announcing a massive pre-tax loss in the fourth quarter that includes “substantial charges which are not reflective of our underlying business performance,” the bank said Thursday.
The Swiss banking giant posted a net loss of 5.83 billion Swiss francs ($5.8 billion), compared to a net profit 691 million francs a year earlier. It reported a pretax quarterly loss of 6.4 billion, including a 3.8-billion-franc impairment charge linked to its acquisition of Donaldson, Lufkin & Jenrette investment bank in 2000.
CEO Tidjane Thiam, who took over in the summer, said the job cuts will represent savings of 1.2 billion francs per year. In October, Credit Suisse outlined plans for staff reductions as part of targeted total cost savings of 3.5 billion francs, but Credit Suisse had not specified the number. Part of those savings will come through “the rightsizing of the bank’s London presence,” the earnings report said.
Thiam pointed to a challenging quarter and cited a sharp drop in oil prices, “asynchronous” policies by top central banks, lower liquidity, a strong Swiss franc and “uncertainties on Chinese growth.”
“Market conditions in January 2016 have remained challenging and we expect markets to remain volatile throughout the remainder of the first quarter of 2016 as macroeconomic issues persist,” he said. “We expect to continue to make progress on the key dimensions of our strategy as we continue the restructuring of the bank to position it well for the future, beyond 2016.”
The earnings report said that in light of a “the difficult market environment, we are further accelerating our targeted 2018 cost reduction program, including an accelerated reduction in workforce (employees and contractors) of approximately 4,000 positions.”
Thiam said the bank turned in a “resilient performance” amid lower levels of client activity and issuance and “material shifts in the prices of some asset classes,” and Credit Suisse said the fourth quarter was the strongest quarter in five years in terms of announced mergers and acquisitions transactions.
Revenues fell 34 per cent to 4.2 billion francs. For the year, the net loss was 2.9 billion francs, compared to a net profit of 1.9 billion a year earlier.