Credit Suisse is preparing to cut more than 10% of its investment banking workforce in Europe this year, according to people familiar with the matter, and has already laid off hundreds of staff in London and Zurich last month.
The crisis-hit Swiss financial institution announced in October plans to cut 9,000 jobs globally from its 52,000 workforce over the next three years. But those plans have stepped up in recent weeks as the bank prepares to announce its second straight annual loss next month.
Analysts expect a wave of massive job cuts at investment banks around the world following Goldman Sachs, which launched plans to lay off more than 3,000 staff this week.
Investment bank earnings have taken a severe hit last year, lenders have come under pressure to cut costs, and have significantly increased hiring over the past two years.
Credit Suisse has outperformed its peers after suffering a large customer exit in October following social media rumors about its financial health, and has posted consecutive quarterly losses over the past three years. under severe stress.
The first wave of 2,700 job cuts globally in December included 540 job cuts in Switzerland and 200 in London.
Credit Suisse employs over 5,000 people in London and over 16,000 people in Switzerland.
Talks about the next round of layoffs began before Christmas, with more than 10% of the European investment banking business in talks, according to a person familiar with the matter. A final decision is expected next month.
The lender has main centers in New York and London and employs approximately 17,000 investment bankers worldwide.
At some of Credit Suisse’s smaller outposts in Europe, a third of jobs are vacating as banks restructure operations in hopes of eliminating overlapping roles and front office positions. threatened.
Many of the investment bankers who survived job cuts at Credit Suisse’s New York office could join the First Boston spinoff plan led by former Credit Suisse board member Michael Klein.
But given First Boston’s focus on the US market, it’s less certain about the investment bank’s role in Europe.
A European banker said: “It’s clear that European activity will be tapered off, but it’s hard to know where we fit in.” “We are in wait-and-see mode.”
Another lever managers have when it comes to cost control is cutting the bonus pool, which was cut by a third last year.
Few investment bankers at Credit Suisse have high hopes for this year’s bonus given the annual loss the bank has suggested it will report next month.
But senior management is keen to provide incentives for wealth managers with strong personal ties to clients to prevent alienation from competitors and staff working on important projects.
“My team’s bonuses will be close to zero,” said a Credit Suisse dealmaker.
“But the heads of commercial banks will get a lot of attention and will try to keep as many people as possible.”
In just three weeks last October, wealth management clients withdrew CHF63.5 billion ($68 billion) from Credit Suisse. This equates to his 10% of assets.
By comparison, UBS suffered a 10% outflow during the year of the global financial crisis.
Credit Suisse chairman Axel Lehmann told the Financial Times last month that withdrawals were flat and customers were returning to banks.
Credit Suisse declined to comment on prospects for further job cuts or its bonus policy.