After scandals that lead to heavy losses and investor concerns, Credit Suisse, Switzerland’s second-largest bank, is taking a series of definitive actions to recover from the catastrophic sequence of business setbacks and scandals.
The Swiss bank has seen a series of departures including clients’ negative reactions by withdrawing over CHF7.6 billion of assets from the bank in the second quarter of 2022 and another CHF12.9 billion within the last three months.
Credit Suisse’s recovery plan
In its attempt to stop this catastrophic sequence, the Swiss bank is shedding thousands of jobs, selling off parts of its business, and raising billions in extra capital to reverse a downward spiral in fortunes. Credit Suisse management is attempting to stop the rot with an extreme overhaul of the bank’s operations and strategy.
The Swiss bank is to cut 2,700 jobs this year and is eventually aiming for its headcount to fall from 52,000 to 43,000. Some 2,000 posts will be lost in Switzerland, decreasing headcount in the bank’s home market to around 14,000.
This new strategic thrust will help the bank shrink its overall cost base by 15% by 2025 and place a greater priority on the group’s wealth management and Swiss-based operations.
A new capital release unit has been set up by the Swiss bank precisely to sell off any assets that the bank now considers too risky and of low strategic importance.
Credit Suisse plant to raise extra capital
The bank has recorded basically losses over the last 12 months and posted a huge CHF4 billion loss for the third quarter of this year. Most of this amount is caused by a tax-related charge resulting from its restructuring drive.
So as part of the restructuring plan to shore up its staggering capital base by issuing new shares, Credit Suisse aims to raise $4bn in new capital, $1.5bn of which will come from Saudi National Bank (this is subject to the approval of a general meeting scheduled for November this year)
The bank’s chair admitted that the Swiss bank had lost focus in recent years, which resulted in the need for a revolutionary strategy and a clear execution plan to create a more powerful, more resilient, and more efficient bank with a strong foundation.
Credit Suisse has confirmed it will restructure the bank to create a simpler, more stable, and more focused business model built around its client’s needs.
Credit Suisse is expected to conclude its plans over the next couple of months.
Switzerland‘s financial sector, and particularly its banking sector, is one of the cornerstones of the Swiss economy (which is one of the best in the world).
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