Credit Suisse unveils ‘radical’ strategy as Q3 loss hits $4 billion

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GENEVA (AP) — Swiss bank Credit Suisse on Thursday unveiled a “radical strategy” aimed at overcoming a series of recent issues that have tarnished its reputation, involving cost cuts, staff reductions, measures to reduce risk and a cash injection via a purchase of shares in a major Saudi bank.

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The Zurich-based bank also said it would relaunch investment banking brand CS First Boston, once a Wall Street mainstay, as it reported a loss of 4 billion Swiss francs ($4.1 billion) in the third trimester.

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Credit Suisse has announced its intention to raise some 4 billion Swiss francs ($4.1 billion) by issuing new shares to certain investors, including the Saudi National Bank, which has pledged to inject some 1.5 billion Swiss francs ($1.5 billion) – putting its stake in the Swiss bank at just under 10%.

Overall, Credit Suisse has planned restructuring charges and other costs totaling 2.9 billion Swiss francs ($2.9 billion) as part of its “transformation” between the second quarter and 2024, which would be paid for by divestitures, the exit of certain companies, the raising of capital and the use of existing assets. banking resources.

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The “historic moment” for the Zurich-based bank, as new CEO Ulrich Koerner put it, comes as Credit Suisse acknowledged “disappointing” recent performance at a time of market and macroeconomic uncertainty.

Chairman Axel Lehmann said the bank had become « fuzzy » and its board had assessed its future direction.

“Today, we are announcing the result of this process – a radical strategy and a clear execution plan to create a stronger, more resilient and more efficient bank with a solid foundation, focused on our customers and their needs,” said said Lehman, insisting a « cultural transformation » was underway.

The bank plans to cut its cost base by around 15% – or 2.5 billion Swiss francs ($2.5 billion) – by 2025, and said a « downsizing » of about 5% of its workforce – about 2,700 employees – was already underway.

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The bank said it has reached an agreement to transfer a « significant portion » of its securitized product pool to an investor group led by Apollo Global Management.

Credit Suisse said third-quarter revenue rose 4% to 3.8 billion Swiss francs ($3.9 billion).

Credit Suisse has sought transformations in the past and faced issues including bad bets on hedge fund investments, among other issues. Last week he announced settlements in the United States and France.

Over the summer, a Swiss court fined Credit Suisse for failing to prevent money laundering linked to a Bulgarian criminal organization some 15 years ago.

Credit Suisse, Switzerland’s second-largest international bank after rival UBS, has origins that date back to the mid-19th century and the early development of the Swiss railway network.