Zurich / Bloomberg
Credit Suisse Group AG is planning to speed up and deepen cuts to the investment bank, five months after it announced an overhaul, said a person with knowledge of the discussions.
Switzerland’s second-biggest bank may disclose that it’s accelerating cutbacks to trading businesses, said the person, who asked not to be identified because the information is private. The Zurich-based lender also might update investors on first-quarter earnings, after rival Wall Street banks warned their shareholders about a drop in revenue from trading and dealmaking.
The world’s biggest banks are struggling with record-low interest rates, slumping commodity prices, cooling emerging-market growth and, in some cases, mounting fines from past misconduct. Market volatility at the start of this year has further eroded what is normally Wall Street’s strongest quarter, when clients including corporations and investors adjust their strategies.
Chief Executive Officer Tidjane Thiam, who presented a strategy shift in October, has struggled to restore investor confidence as he restructures businesses to bolster profitability and meet tougher capital rules. While he’s staked much of his strategy on growth in managing money for the rich and scaled back investment-banking businesses, the shares fell 34 percent this year.
Nicole Sharp, a Credit Suisse spokeswoman, declined to comment.
Deutsche Bank AG and UBS Group AG told shareholders last week that challenging market conditions are undermining their efforts to improve earnings. John Cryan, Deutsche Bank’s co-CEO, said he doesn’t expect Germany’s biggest bank to post a profit this year as it tries to overhaul its business, scaling back some operations. In the US, firms including JPMorgan Chase & Co. and Citigroup Inc. have warned in recent weeks that the turbulent markets are battering their Wall Street operations by prompting companies to delay share offerings and investors to pull back on trading.
Credit Suisse has been reducing its macro trading business, where it is closing much of its operations in Europe, and in prime services, the business that caters to hedge funds. In an October presentation, it identified these two units as not recouping the cost of capital.
Thiam, the former CEO of Prudential Plc, took the top job at Credit Suisse on July 1. Under his overhaul, he’s seeking to more than double pretax profit by 2018, which he wants to achieve by shrinking the volatile trading business and building up wealth management in Asia. The company raised about 6 billion Swiss francs ($6.2 billion) as it embarked on the plan.
It later posted its biggest quarterly loss in seven years for the final three months of 2015, as it wrote off goodwill and set aside provisions for litigation. Thiam said last month he would accelerate staff reductions, with 4,000 jobs cut by the end of this year, citing a “challenging” environment.