Battered by years of scandals and losses, Credit Suisse (CSGN.S) plans to raise capital, cut thousands of jobs and spin off its investment bank.
Here are main elements of the new strategy:
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.
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
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.
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.
($1 = 0.9864 Swiss francs)