Credit Suisse: Brexit Leads to Further Job Cuts

Credit Suisse, London

Credit Suisse, London

The looming departure of the U.K. from the European Union is adding pressure on Credit Suisse to cut costs even more than the company already planned to do, according to top managers at the bank.

Credit Suisse (CS), the Swiss No. 2, has eliminated 4,800 jobs so far this year, four fifths of its target for the full year. CEO Tidjane Thiam had set the target of 6,000 jobs before British voters opted to leave the EU.

With the decision going the way it did, the bank, and in particular its investment banking unit, is likely to cut even more jobs than it already planned to do, according to a report by «Bloomberg».

Organizational Changes in the U.K.

Marisa Drew and Mark Eichelin, joint heads of investment banking in Europe, Middle East and Africa (EMEA), told «Bloomberg» that there would be some «pruning» in their region. The cuts, though not in a larger scale, will come on top of the proposed 6,000. Drew didn't give a specific number.

The cuts come as the bank has decided to cover large, global companies based in the U.K. by dedicated industry teams. Smaller companies, with a U.K. focus, will be served by a newly formed advisory and corporate broking group in the country, «Bloomberg» said.

The new group will be managed by Charles Donald, who headed the U.K. investment banking division together with Jonathan Grundy. Grundy will oversee a new infrastructure team in EMEA that combines oil and gas, transportation and energy.

Cuts at Cash Equities

The bank has been hurt by the decision to leave the EU as investors have put up decisions in anticipation of clearer indications about how the future ties to Europe will look like.

Still, the Swiss banking giant ranks third on deals announced this year in EMEA, after Goldman Sachs and Morgan Stanley, according to «Bloomberg ».

With markets generally subdued due to various geopolitical uncertainties, CS is also looking at potential cost cuts in other areas, for instance at the cash equities business. It recently cut 20 jobs in the unit in London, Dubai and in South Africa, according to a separated report by «Bloomberg». CS didn't provide a comment.

Private vs. Investment Banking

The adjustments in the capital market units show how difficult it is to bring the number of employees and the capital invested in tune with business cycles.

Thiam wants to strenghten private banking, while reducing the dependence of the bank on investment banking. In the past six months however this may have been the wrong strategy.

Results on November 3

Private banking is suffering from the uncertainties on the markets and a reluctance to invest. By contrast, business segments such as bonds have come alive again, according to the results of the U.S. banks.

Credit Suisse will report third-quarter figures on November 3.


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