Credit Suisse has unveiled sweeping plans to cut 9,000 jobs and raise billions of pounds from investors in a Saudi-led funding round as part of a scaled overhaul company intended to draw a line under a series of scandals and help it recover from a £3.5 billion loss.
The announcement follows month of speculation on the extent of changes planned under its new boss, Ulrich Körner, who has been tasked with shrinking investment banking and cutting costs.
Credit Suisse bosses are hoping investors will greenlight plans to raise 4 billion Swiss francs (£3.5 billion), including 1.5 billion Swiss francs from the Saudi National Bank (SNB), next month. The move would give the Saudi bank a 9.9% stake, 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-biggest bank said it was laying off 2,700 full-time staff, representing about a third of its planned cuts and a fifth of its 52,000 employees worldwide.
It expects the total number of employees to decline to 43,000 by the end of 2025, thanks to a combination of further job cuts and natural attrition, which means it will not replace staff when they leave the bank. The lender has not confirmed how many of its 5,500 UK employees may be affected.
“This is a historic moment for Credit Suisse,” Körner said. “We are radically restructuring investment banking 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 greater emphasis on the bank’s asset management division for high net worth clients – are expected to cost around 2.9 billion Swiss francs over the next year. This will be funded by exiting some of its investments, selling parts of its business and raising fresh money from investors.
The Saudi National Bank said it planned to participate in the fundraising to “support the establishment of an independent investment bank focused on advisory and capital markets business.”
If approved, it will add another Middle Eastern investment vehicle to the bank’s list of major shareholders, which includes the Qatar Investment Authority and private investment firm Olayan Group, which has ties to Saudi Arabia.
Credit Suisse has also confirmed that it will continue to spin off its investment bank as it tries to raise more cash.
This will involve selling part of its securitized products business – which buys and sells investment products backed by pools of assets such as mortgages, credit card debt and car loans – to investment groups. Americans Pimco and Apollo.
It will also create part of its investment bank, which will operate under the CS First Boston brand. 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 including UBS and Goldman Sachs.
Credit Suisse Chairman 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 several months, the board of directors and the management board have been evaluating our future direction and, in doing so, we believe that we have left nothing unturned,” he added.
The overhaul follows a series of scandals in recent years. Credit Suisse was involved in the bankruptcy of lender Greensill Capital and US hedge fund Archegos Capital in 2021. That year it also admitted defrauding investors in connection with Mozambique Tuna bond loan scandalresulting in a fine of over £350million.
This year, Swiss prosecutors found the bank guilty of helping to launder money for the Bulgarian mafia. The bank denied any wrongdoing and said it would appeal the decision.
Credit Suisse also came under fire after the Investigation of Swiss secretswhich showed that he had served clients involved in torture, drug traffickingmoney laundering, corruption and other serious crimes for decades.
“The new board is focused on restoring trust through the relentless and responsible implementation of our new strategy, where risk management remains at the very heart of everything we do,” Körner said.