Credit Suisse has disclosed sweeping plans to cut 9,000 jobs and raise billions of pounds from investors in a Saudi-led funding round, as part of a company-wide overhaul meant to draw a line under a series of scandals and help it recover from a £3.5bn loss.
The announcement follows months of speculation over the scale of change scheduled under its new boss, Ulrich Körner, who has been tasked with scaling back the investment bank and slashing costs.
Credit Suisse bosses hope investors will green-light plans to raise 4bn Swiss francs (£3.5bn), including 1.5bn Swiss francs from the Saudi National Bank (SNB), next month. The move would give the Saudi bank a 9.9% shareholding, making it the second-largest investor behind US investment group Harris Associates.
Credit Suisse’s share price fell 12% after the announcement.
Switzerland’s second-largest bank said it was shedding 2,700 full-time staff, accounting for about a third of its planned cuts and a fifth of its 52,000 global employees.
It expects the total staff base to shrink to 43,000 by the end of 2025, through a mix of further job cuts and natural attrition, meaning it will not replace staff when they leave the bank. The lender did not confirm how many of its 5,500 UK staff could be affected.
“This is a historic moment for Credit Suisse,” Körner said. “We are radically restructuring the investment bank to help create a new bank that is simpler, more stable and with a more focused business model built around client needs.”
The restructuring plans – which will put more focus on the bank’s asset management division for wealthy clients – are expected to cost about 2.9bn Swiss francs over the next three years. That will be funded by dumping some of its investments, selling portions of its business, and raising fresh money from investors.
The Saudi National Bank said it planned to take part in the fundraising to “support the establishment of an independent investment bank focused on advisory and capital markets activities”.
If approved, it will add another Middle Eastern investment vehicle to the bank’s list of top shareholders, which includes the Qatar Investment Authority and private investment firm Olayan Group, which has links to Saudi Arabia.
Credit Suisse also confirmed it would continue carving up its investment bank as it tried to raise more cash.
That will involve selling a part of its securitised products business – which buys and sells investment products that are backed by pools of assets like mortgages, credit card debt and car loans – to the American investment groups Pimco and Apollo.
It will also spin-off part of its investment bank, which will run under the branding CS First Boston. Credit Suisse said the business would be “more global and broader” than most boutique firms but would have a “more focused” approach than big investment banking rivals, which include UBS and Goldman Sachs.
The Credit Suisse chair, Axel Lehmann, said while the investment bank had built a “powerful and respected” business over its 166-year history, it had become “unfocused” in recent years.
“For a number of months, the board of directors along with the executive board has been assessing our future direction and, in doing so, we believe we have left no stone unturned,” he added.
The overhaul follows a series of scandals in recent years. Credit Suisse was embroiled in the collapse of the lender Greensill Capital and the US hedge fund Archegos Capital in 2021. That year, it also admitted defrauding investors as part of the Mozambique “tuna bonds” loan scandal, resulting in a fine worth more than £350m.
This year, Swiss prosecutors found the bank guilty of helping to launder money on behalf of the Bulgarian mafia. The bank has denied wrongdoing and said it would appeal against the ruling.
Credit Suisse also came under fire after the Suisse secrets investigation, which showed it had served clients involved in torture, drug trafficking, money laundering, corruption and other serious crimes over decades.
“The new executive board is focused on restoring trust through the relentless and accountable delivery of our new strategy, where risk management remains at the very core of everything we do,” Körner said.
• This article was amended on 29 October 2022. The Credit Suisse restructuring plan is expected to cost 2.9bn Swiss francs over the next three years, not over the next year as an earlier version said.
