Credit Suisse (NYSE:CS) will cut another 1,500 jobs as it tries to restructure its costly investment bank to meet tough new regulations and rebound from what was a disappointing third quarter for the Swiss bank.
The job cuts come on top of 2,000 by Credit Suisse in July, amounting to about 7% of its global workforce in total. The bank expects to see annual cost savings of two billion francs by 2013 from the staff reduction.
Swiss newspaper Tages-Anzeiger reported on Monday that the additional jobs would be taken primarily from investment banking in the U.S. and London, but will also affect wealth management. However, the company told reporters on Tuesday that the jobs would be taken across all divisions.
The additional job cuts come as the company tries to turnaround its investment bank and adapt to more stringent capital regulations - a trend seen across the industry.
On Monday, Barclays (NYSE:BCS) reported weaknesses from its investment bank amid global financial turmoil and said it will likely accelerate plans to axe jobs amid a company-wide cost savings initiative.
In August, Switzerland’s other large bank, UBS (NYSE:UBS) said it would slash 3,500 jobs to save two billion francs in costs.
Tuesday’s announcement by Credit Suisse followed dismal third-quarter earnings from the company's investment banking segment. Like its peers, the banking giant has been struggling to overcome weaknesses in the unit amid deepening debt problems in the euro zone.
The company reported a net profit of 683 million francs, which was weaker than analysts had expected, with a pre-tax loss of 190 million francs in its investment bank.
“During the third quarter we experienced a challenging environment with a high degree of uncertainty, low levels of client activity across businesses and extreme market volatility,” Credit Suisse CEO Brady Dougan said in a statement.
Credit Suisse, Switzerland's second-largest bank, said it will accelerate previously announced plans and cut risk-weighted assets in fixed income in half by 2014.
In the company’s private banking unit, it will focus on improving its global footprint in faster-growing and large markets such as Asia and Brazil in an effort to increase the bank’s contribution to net income by 800 million francs by 2014.