This 166 Year Old Financial Company Will Fire 9000 Employees Across Globe; Expects Rs 12,000 Crore Loss In 90 Days
The latest major company, not an IT one but in the banking sector, Credit Suisse announced Wednesday that it is looking at a 1.5 billion Swiss franc ($1.6 billion) loss for the final three months of the year.
Multiple sources of trouble
In a market update the firm said, “These decisive measures are expected to result in a radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital, each of which are progressing at pace”.
It revealed that wealthy clients had made hefty withdrawals, leading to a big drop in liquidity, breaching some regulatory limits.
As a result, the bank was forced to dip into liquidity buffers, slipping below certain minimum regulatory requirements although it said its core liquidity and funding requirements had been held.
Expected job cuts in coming years
In a cost cutting exercise the bank began slashing 2,700 jobs in the fourth quarter and plans to eliminate around 9,000 positions by 2025.
Now as to how the layoffs will happen, the bank mentioned a number of factors that will influence the eventual results.
These include remaining performance for the rest of the year, continued exits of non-core positions, goodwill impairments, and other asset sales.
The company is expecting a loss of 75 million Swiss francs in the fourth quarter due to the sale of its shareholding in British wealth tech platform Allfunds group.
Issues plaguing the firm
Due to lower deposits and reduced assets under management, net interest income, recurring commissions and fees are expected to decline.
And this will all result in a loss for the wealth management division.
“Together with the adverse revenue impact from the previously disclosed exit from the non-core businesses and exposures, and as previously announced on October 27, 2022, Credit Suisse would expect the Investment Bank and the Group to report a substantial loss before taxes in the fourth quarter 2022, of up to CHF ~1.5 billion for the Group,” the bank said.
Banking joining IT cohorts
Credit Suisse held an extraordinary general meeting on Wednesday which had shareholders vote on the group’s restructuring plans and capital raising proposals.
The only thing differentiating Credit Suisse from the daily reports of major companies laying off in the hundreds and thousands is that CS is a bank.
So for once it’s not just the IT sector that’s hit but also the banking majors now, as it appears.