By: Ken Chase.
In an online interview Friday, Swiss National Bank Vice Chairman Martin Schlegel offered his support for Credit Suisse’s recently announced plans to restructure and raise $4 billion in capital from investors. Schlegel endorsed the move during an interview with Swiss newspaper Finanz und Wirtschaft (Finance and Economics).
According to Schlegel, the company’s plan to refocus its business model will help it to reduce risks, while creating a stronger base of capital. “The SNB welcomes the steps recently announced for the strategic transformation of Credit Suisse,” he said.
In Thursday’s Credit Suisse announcement, the bank confirmed its plans to seek roughly $4 billion from investors to shore up capital. In addition, the company intends to eliminate several thousand jobs as it transitions its business model away from investment banking and focuses its efforts on serving its wealthy clients.
Reports suggest that the bank plans to cut roughly 9,000 jobs, which is nearly twice the number analysts expected to see just a few short months ago. Those plans will reportedly see Credit Suisse’s employee count decrease from about 52,000 to around 43,000 within the next three years.
Credit Suisse has indicated that the reduction in its workforce will include some staff who will retain employment in the securitized products group when Apollo Global Management completes its purchase of that asset. Another 6.300 employees are expected to be cut through a combination of natural attrition and other workforce reduction strategies.
About 2,700 employees will see their jobs disappear in the last quarter of 2022. That represents about 5% of the bank’s current workforce.
Meanwhile, the bank’s stock price dropped 18% on Thursday on news that Credit Suisse third quarter losses were far worse than analysts had anticipated. While the markets expected losses of around 567 million Swiss francs, actual reported losses cam in at a little more than 4 billion Swiss francs. The bank claims that 3.6 billion of that loss was due to “reassessment of deferred tax assets as a result of the comprehensive strategic review.”