Credit Suisse will slash jobs
Source: Agencies |
July 29, 2011, Friday
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Print Edition
Print Edition
CREDIT Suisse Group announced yesterday it will cut more than 2,000 jobs after its second-quarter profits dropped by half, more than expected, due to a strong Swiss franc and a plunge in trading and investment banking earnings.
Credit Suisse follows cross-town rival UBS and US giant Goldman Sachs in trimming its payroll costs in reaction to unexpectedly weak profits.
The company said it would eliminate the jobs globally, including about 500 in Switzerland, as its net profit fell to 768 million Swiss francs (US$959 million) from 1.59 billion francs in last year's April-June period. The result was below analysts' predictions for a profit of 1 billion Swiss francs.
Chief Executive Brady Dougan said in a statement the second quarter performance was "disappointing" but defended the company's overall business model.
He said asset management and private banking remained strong, although investment banking fell further than he expected, in part due to market uncertainty about US and eurozone debt as well as new rules requiring banks to hold larger capital buffers.
"To ensure attractive returns in the face of an uncertain and challenging economic and market environment, we continue to be proactive about seeking cost efficiencies across the bank," Dougan said.
The Zurich-based bank will cut about 4 percent of its 50,700 full-time employee positions worldwide, for a savings of 1 billion francs by 2012.
Revenue from its main operations fell 25 percent to 6.33 billion francs. Trading and fixed-income sales were also down, largely because of a 23 percent rally in the value of the Swiss franc against the US dollar.
Private banking disappointed, with new assets amounting to only 11.5 billion francs, below analyst forecasts for 14.2 billion francs.
Investors were looking for signs of how the Zurich-based bank will deal with a recently announced US tax evasion probe similar to the one that hit rival UBS AG three years ago.
Credit Suisse follows cross-town rival UBS and US giant Goldman Sachs in trimming its payroll costs in reaction to unexpectedly weak profits.
The company said it would eliminate the jobs globally, including about 500 in Switzerland, as its net profit fell to 768 million Swiss francs (US$959 million) from 1.59 billion francs in last year's April-June period. The result was below analysts' predictions for a profit of 1 billion Swiss francs.
Chief Executive Brady Dougan said in a statement the second quarter performance was "disappointing" but defended the company's overall business model.
He said asset management and private banking remained strong, although investment banking fell further than he expected, in part due to market uncertainty about US and eurozone debt as well as new rules requiring banks to hold larger capital buffers.
"To ensure attractive returns in the face of an uncertain and challenging economic and market environment, we continue to be proactive about seeking cost efficiencies across the bank," Dougan said.
The Zurich-based bank will cut about 4 percent of its 50,700 full-time employee positions worldwide, for a savings of 1 billion francs by 2012.
Revenue from its main operations fell 25 percent to 6.33 billion francs. Trading and fixed-income sales were also down, largely because of a 23 percent rally in the value of the Swiss franc against the US dollar.
Private banking disappointed, with new assets amounting to only 11.5 billion francs, below analyst forecasts for 14.2 billion francs.
Investors were looking for signs of how the Zurich-based bank will deal with a recently announced US tax evasion probe similar to the one that hit rival UBS AG three years ago.
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