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 The first quarter is normally the most lucrative period for the
industry, when investors put their money to work at the start of the
year, but this year revenues have been hit by record low interest
rates, low commodity prices and slower growth in emerging markets.
Rival Deutsche Bank's <DBKGn.DE> finance chief said on Tuesday the
first two months of 2016 were the worst start to a year for banks
that he has seen in his banking career.
Credit Suisse said trading revenues at its Global Markets division
were set to fall 40-45 percent from the first quarter of 2015. It
will cut 2,000 jobs at the division, mostly in London and New York.
The latest cuts bring the total to 6,000 job losses announced by
Chief Executive Tidjane Thiam, who took over the running of
Switzerland's second-largest bank last year.
Thiam, who told analysts he and other senior executives were
surprised by the extent of illiquid positions Credit Suisse had
taken, revealed he had asked for his 2015 bonus to be cut by 40
percent, even more than the 36 percent cuts in bonuses for staff in
the Global Markets division.
The chief executive from Ivory Coast is five months into
implementing his new strategy. He raised around 6 billion Swiss
francs in capital last year and is cutting back Credit Suisse's
volatile investment banking business while focusing on more stable
wealth management.
BOWING TO THE INEVITABLE
The shares, which had fallen by more than a third this year, rose
around 2 percent by 1200 GMT.
"This was the restructuring plan investors were hoping for last
year," said George Karamanos, an analyst at Keefe, Bruyette & Woods.
"A negative operating environment has forced management to address
tough issues it avoided last time around."
A top-30 investor in the bank added: "I believe he is bowing to the
inevitable. In my view the big 'universal' banks are, in their
current forms, broken models and unmanageable."
In the statement on Wednesday Credit Suisse boosted to "at least"
4.3 billion francs its targeted savings by 2018, up from 3.5 billion
announced in October. It aims for 1.7 billion francs in cost savings
in 2016 and is likely to make a first-quarter loss after exceptional
items, Thiam said.
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He declined to say whether 1 billion francs in restructuring costs
expected this year would allow a 2016 net profit.
Thiam said a combination of high costs, exposure to illiquid
inventory in fixed income, "historically low levels of client
activity" and challenging market conditions had led to disappointing
results at the Global Markets division.
"In this context, we have taken immediate action to reduce outsized
positions in activities not consistent with our new strategy and
systematically reduced our exposures," Thiam said.
Thiam said that write-downs at Global Markets, which totaled $633
million in the fourth quarter of 2015, were lower in the first
quarter at $346 million as of March 11, 2016.
On a brighter note, the bank cited net new money inflows so far this
year of 3.6 billion francs at its Asia Pacific business, 7.1 billion
at international wealth management, and 4.5 billion at its Swiss
universal bank, whose partial public listing in 2017 was on track if
market conditions permit.
(Additional reporting by Joshua Franklin in Luxembourg and Simon
Jessop in London; Editing by Elaine Hardcastle)
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