Credit Suisse is preparing to cut more than 10 percent of European investment bankers this year, after already letting hundreds of staff go to London and Zurich last month, according to people familiar with the moves.
The crisis-stricken Swiss bank announced in October that it plans to cut up to 9,000 jobs globally over the next three years from its workforce of 52,000. But those plans have intensified in recent weeks as the bank prepares to make its second consecutive announcement. annual loss next month.
Analysts expect a wave of large job cuts across investment banks globally, in the wake of Goldman Sachs’ initiative, which initiated a plan To fire more than 3,000 employees this week.
Investment banking services Revenues took a hit last year and lenders are under pressure to cut costs after increasing hiring opportunities over the past two years.
Swiss credit It is under more severe pressure than its peers, given that it suffered massive client withdrawals in October following rumors on social media about its financial health and posted a string of quarterly losses over the past three years.
The initial wave of 2,700 global layoffs in December included 540 jobs in Switzerland and up to 200 in London.
Credit Suisse employs more than 5,000 people in London and 16,000 in Switzerland.
Consultations on the next round of layoffs began before Christmas, with more than 10 percent of investment bank jobs in Europe discussed, according to people familiar with the talks. A final decision is expected next month.
The lender employs around 17,000 investment bankers globally, with its main centers in New York and London.
In some of Credit Suisse’s smaller European outposts, up to a third of jobs are under threat as the bank restructures its operations in hopes of eliminating overlapping roles and front-office positions.
Several investment bankers who survived the job cuts at Credit Suisse’s New York office, its main hub outside Europe, have the prospect of joining the spin-off First Boston, which will be led by former Credit Suisse director Michael Klein.
But there is less certainty about investment banking roles in Europe, given that First Boston will be concentrated in the US market.
“It is difficult to know where we will fit in, although it is clear that European activities will shrink over time,” said a European-based banker. “We are in a wait-and-see mode.”
Another lever managers have when it comes to managing costs is cutting the bonus pool, which was cut by a third last year.
Few of Credit Suisse’s investment bankers expect much in rewards this year, given the annual loss the bank indicated it will report next month.
But senior managers are keen to offer incentives to wealth managers with strong personal relationships with clients to prevent them from defecting to competitors as well as to staff working on important projects.
“I expect the rewards on my team to be close to zero,” said one Credit Suisse dealmaker.
“But as for the big guys in the private banks, they’re going to get a lot of attention and they’re going to try to keep as many of them as they can.”
In just three weeks in October last year, Wealth Management clients withdrew 63.5 billion Swiss francs ($68 billion) from Credit Suisse, the equivalent of 10 percent of assets.
By comparison, UBS suffered 10 percent of outflows in a full year during the global financial crisis.
Credit Suisse chair Axel Lehmann told the Financial Times In the past month, withdrawals have died down and customers have returned to the bank.
Credit Suisse declined to comment on the possibility of further job cuts or bonus policy.