Credit Suisse announces 6,500 layoffs after reporting $2.35 billion dollar loss

More bad news for the bankers as Zero Hedge reports Credit Suisse will be cutting 6,5000 jobs after reporting a 2.35 billion dollar loss.

After Credit Suisse reported yet another significant loss for the full year 2016, amounting to 2.35 billion Swiss francs, more than the CHF2.07bn expected, the Swiss banking giant said it was looking to lay off up to 6,500 workers and said it was examining alternatives to a planned stock market listing of its Swiss business.

“We’re setting a target now of between 5,500 and 6,500 for 2017,” Chief Financial Officer David Mathers said in a call with analysts on Tuesday after the bank published earnings. The bank did not specify where the extra cuts would come but said this would include contractors, consultants and staff, Reuters reported.

For the fourth quarter, Credit Suisse reported a 2.35 billion franc net loss, largely on the back of a roughly $2 billion charge to settle U.S. claims the bank misled investors in the sale of residential mortgage-backed securities.  Despite the loss, Credit Suisse proposed an unchanged dividend of 0.70 francs per share, in line with market expectations.

CEO Tidjane Thiam, who took over at Switzerland’s second biggest bank just over 18 months ago, is shifting the group more toward wealth management and putting less emphasis on investment banking. As part of his turnaround plans, the bank is looking to cut billions of dollars in costs and cut a net 7,250 jobs in 2016 with more to follow this year.

Additionally, Credit Suisse said it was still preparing sell 20-30% of its Swiss business in an initial public offering but left the door open to alternative options to strengthen its balance sheet. It said a flotation depended on market conditions and board approval. “So we will continue as planned our preparations for an IPO in the second half of ’17,” Thiam told analysts on the call. “That said, we will also continue to analyze the evolution of our regulatory environment which is key in this and, as we always do, continuously examine a broad range of options to determine if there are ways to reach a more attractive risk/reward outcome for our shareholders.”

Aside from the “one-time charge”, the bank’s other results showed a modest improvement. “Capital ratios were much better than expected. On a divisional level, results in IWM (International Wealth Management) and IBCM (Investment banking and Capital Markets) were better than expected,” Vontobel analyst Andreas Venditti, who has a “hold” rating on the stock, wrote in a note.

Still, just like Deutsche Bank, in wealth management, Credit Suisse said it suffered net outflows in the fourth quarter due to clients pulling cash to participate in tax amnesty programs and a decision to drop certain external asset managers. Offsetting that, however, the bank said all its wealth management divisions had seen positive inflows year to date. At the end of the fourth quarter, Credit Suisse’s common equity Tier 1 capital ratio, an important measure of balance sheet strength, was 11.6 percent, down from 12 percent in the third quarter but ahead of market expectations.

The bank’s shareholders greeted the news of fresh layoffs, sending the stock 3% higher in early trading.

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Born and raised in the backwoods of Michigan, Thomas Dishaw is an independent writer and entrepreneur. His work has been criticized in Slate, Right Wing Watch, Gawker, Daily Mail, and NY Daily News. Thomas currently writes for NaturalNews.com and resides in Delaware with his wife and Shih Tzu, where they enjoy healthy eating, politics, MSU Spartans and conservative values.
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