Credit Suisse Group AG (NYSE:CS) has announced that it will cut 9,000 jobs, raise US$4bn and spin off most of its investment bank to try to stop its ongoing losses.
Saudi’s National Bank will contribute US$1.5bn in the new funding round for a 9.9% stake, an investment that forms a key part of chief executive Ulrich Koerner’s plans to revive the business through wealth management.
The Zurich-based lender posted another multi-billion deficit in its latest quarter, with the US$4bn loss adding to US$3.7bn of losses in the previous three quarters.
Credit Suisse said the fundraising was part of “a radical strategy” to create “a stronger, more resilient and more efficient bank”.
Reports that its US businesses might be on the block were confirmed, with the securitised product unit to be sold to Pimco and Apollo and its capital markets/advisory arm spun off into a revised CS First Boston.
Ulrich Körner, Credit Suisse's chief executive, said it might IPO CS First Boston in due course with an unnamed investment bank already committed to put in US$500mln.
Saudi National said it would also invest money into CS First Boston.
“We are radically restructuring the investment bank to help create a new bank that is simpler, more stable and with a more focused business model built around client needs,” said Korner in a statrement.
The job cuts will reduce Credit Suisse’s cost base by 15% by 2025 and its staff numbers to 43,000 from 52,000, he added.
Some 2,700 staff to expected to leave by the end of this year.
Credit Suisse has been a byword for scandals and losses in recent years with the failures of inventory financier Greensill and hedge fund Archegos costing it billions.
In June, it was also found guilty by a Swiss federal court of failing to stop money laundering by a Bulgarian cocaine ring, the first time ever a Swiss bank had received a criminal conviction.