Its shares hit a two-week low at 14% after slumping to record lows recently.
The Swiss bank posted its fourth straight quarterly loss, this time of 4-billion Swiss franc ($4.1 billion), mostly due to a a 3.7 billion-franc impairment of deferred tax assets that is related to the revamp, Credit Suisse said today.
The investment banking firm has sought transformations before and has faced issues such as bad bets on hedge fund investments, among other troubles. Recently, it had announced settlements in the US and France.
Over the summer, a Swiss court fined Credit Suisse for failing to prevent money laundering linked to a Bulgarian criminal organization a decade-and-a-half ago.
Overall, the Zurich-based bank predicted restructuring charges and other costs totalling $2.9 billion in connection with its “transformation" between the second quarter and 2024, which would be paid for by divestments, leaving some businesses, raising capital and using existing bank resources.
Key elements of Credit Suisse's new strategy:
CAPITAL
The bank plans to raise 4 billion Swiss francs ($4.06 billion) to strengthen its balance sheet. Part of this will come via an issue of new shares to investors, including Saudi National Bank, which has said it will invest up to 1.5 billion francs for a stake of up to 9.9%. A second part will come via a rights issue for existing shareholders.
JOBS AND COSTS
A headcount reduction of 2,700 full-time-equivalent employees, or 5% of the group's workforce, is already under way in the fourth quarter. By the end of 2025, the bank expects to have around 43,000 full-time-equivalent staff, down from around 52,000 at the end of September, using natural attrition and targeted job cuts.
It aims to reduce its cost base by 15%, or around 2.5 billion francs, to reach around 14.5 billion in 2025.
INVESTMENT BANK
The bank will spin off its capital markets and advisory activities into a separate business as CS First Boston, in a renewal of a former brand. This would be "more global and broader than boutiques, but more focused than bulge bracket players". CS First Boston, will aim to attract third-party capital as well as a preferred long-term partnership with the new Credit Suisse.
Credit Suisse will keep its Markets business, including the strongest trading business. Its cross-asset investor products as well as equities, FX and rates trading will be closely aligned with the wealth management and domestic Swiss bank franchises
BAD BANK
A new Capital Release Unit (CRU) will comprise a non-core unit (NCU) and the group's Securitised Products business, a large chunk of which it has agreed to sell to Apollo Global Management and PIMCO.
The NCU is set to include the remainder of Prime Services, non-Wealth Management related lending in emerging markets, the bank’s presence in select countries, and select European lending and capital markets activities.
The NCU is expected eventually to release around 60% of risk-weighted assets (RWAs) and 55% of leverage exposure by the end of 2025, letting the bank allocate more capital to higher-return businesses where it has competitive advantages.
WEALTH MANAGEMENT
The bank intends to reallocate capital to its core, higher-return businesses. The share of RWAs in Wealth Management, the Swiss Bank and Asset Management, together with Markets, is estimated to increase to almost 80% by 2025, with the revenue share of these businesses to surpass 85%. CS First Boston would account for 9% of RWAs and around 14% of revenue by 2025.
With agency inputs
