Credit Suisse plans to cut 450 frontline jobs at its European investment bank

Credit Suisse’s European operations are set to bear the brunt of front-office job cuts as the Swiss bank prepares to cut about 900 jobs from its investment bank as part of a broader overhaul.

The Swiss bank will cut up to 50% of some 900 customer-facing jobs – or 450 people – from its investment banking and markets business in Europe, the Middle East and Africa, according to people close to the bank. file, while some underperforming divisions in the region are set to shrink.

Credit Suisse has been notifying employees of job cuts since November 7, according to people familiar with the matter, as it embarks on a plan to cut 2,700 positions across the organization by the end of 2022 .

A Credit Suisse spokesperson declined to comment on the investment bank’s cut, but pointed to a previous statement that the bank would cut its workforce by around 9,000 people by the end of 2025 through a combination reductions and natural employee attrition as it reshapes its business. .

LILY Credit Suisse cuts 9,000 jobs and spins off investment bank in sweeping overhaul

Credit Suisse’s investment banking unit is set to be spun off into a new company called CS First Boston, reminiscent of the First Boston brand name it acquired in 1990. However, while executives have spoken of a new “partnership model”, the company will be skewed in favor of the United States, which is by far the largest and most profitable fee pool in the world. Last year, 73% of Credit Suisse’s $4.1 billion in investment banking fees came from the Americas, according to data provider Dealogic.

In Europe, the bank is reducing its capital markets activities, chief executive Ulrich Körner told reporters on an Oct. 27 conference call announcing its new strategy. It employs around 5,000 people in the UK alone, primarily in investment banking and trading functions. Between 40% and 50% of frontline cuts will come from the Emea, sources said FN.

“We will scale our capital markets business in the Emea area to a true advisory-only business,” Körner said. “We haven’t had results for many years and we don’t have the good reputation in Emea.”

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Credit Suisse unveiled its second strategy overhaul in two years on Oct. 27 as executives attempted to turn around the business after a series of crises and multibillion-dollar losses. The Swiss bank suffered a $5.5bn loss from the fallout from family office Archegos Capital, which collapsed in March last year – far more than its peers – and replaced the vast majority of its management team during the period.

CS First Boston will sit somewhere between a boutique investment bank and a bulge support player, executives said during the strategy update. It is moving towards a so-called “capital light” model, focusing on advisory work rather than transactions requiring a large balance sheet.

However, top dealmakers told staff at a town hall meeting in October that the spinoff from CS First Boston was still aimed at maintaining Credit Suisse’s leadership position in leveraged finance, according to people familiar with the matter. despite a projected $35 billion reduction in risk. risk-weighted assets across the organization. In 2019, Credit Suisse ranked second globally in the leveraged finance league table, according to data provider Dealogic, but currently ranks sixth, with revenue of 264 million so far in 2022.

CS First Boston, which will be led by veteran dealmaker Michael Klein, will offer senior bankers an equity stake in the new company, which is opening up to outside investors to provide capital and could eventually spin off from Credit Suisse altogether. The bank is also set to offer a more “eat what you kill” compensation model and bonuses made up of more upfront money in a bid to keep senior traders on board.

Credit Suisse has seen a high turnover of senior traders over the past 18 months, with the departure of around 70 managing directors from its investment banking unit since the collapse of Archegos. Although it hired a similar number during this period, it implemented retention bonuses and other staff benefits in an effort to stem departures.

Körner said the spin-off from CS First Boston had “generated a lot of excitement among our investment banking colleagues as well as talent outside the bank.”

As some senior Credit Suisse dealmakers have continued to land rivals in recent weeks, rival bankers and specialist headhunters have pointed to a newfound loyalty among some to the Swiss bank. Credit Suisse negotiators reneged on informal offers, sources say Financial newschoosing instead to stay with the Swiss bank when launching CS First Boston.

To contact the author of this story with comments or news, email Paul Clarke

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