Switzerland's Second Largest Bank, Credit Suisse, To Layoff 9,000 Employees After $4Billion Loss
After the $4 billion loss announcement, Credit Suisse is revamping itself. Credit Suisse had announced the plan to layoff 5,000 employees last month, but has now hiked the job-cut number to 9,000.
After announcing plans to lay off around 5,000 employees last month, Switzerland¡¯s second biggest bank Credit Suisse has now increased the job-cut number.
After reporting a net loss of 4.03 billion Swiss francs ($4.08 billion) in the June-Sept quarter, Credit Suisse has opted to tap investors for a painful multibillion-dollar capital raise in order to shore up confidence and also fund a long reshaping that will carve out its investment bank and slash its headcount by a massive 9,000.
istock
The bank¡¯s stock dropped as much as 16% upon the announcement of plans to raise 4 billion francs ($4.1 billion) through a rights issue and selling shares to investors, including the Saudi National Bank. It¡¯s effectively breaking up the investment bank, separating the advisory and capital markets unit and selling the majority of a trading business to a group led by Apollo Global Management, as per Bloomberg report. This move would give the Saudi bank a 9.9% shareholding in Credit Suisse, making it the second-largest investor behind US investment group Harris Associates.
Credit Suisse¡¯s shares have plummeted over 56% this year. Its share fall is widely being seen on similar lines like the US¡¯ Lehman Brothers collapse during the 2008 financial crisis. But the bank is hopeful of turning it around with this massive revamp plan.
Also Read: Credit Suisse Fined $2.1 Million In Cocaine Cash Laundering Case
Credit Suisse¡¯s Plans
Commenting on the bank¡¯s plans regarding the restructuring, Credit Suisse¡¯s CEO Ulrich K?rner said ¡°This is a historic moment for Credit Suisse. 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.¡±
swissinfo.ch
Credit Suisse also confirmed it would continue carving up its investment bank as it tried to raise more cash.
As per The Guardian report, this will involve selling a part of its securitised products business ¨C which buys and sells investment products that are backed by pools of assets like mortgages, credit card debt and car loans ¨C to the American investment groups Pimco and Apollo.
It will also spin-off part of its investment bank, which will run under the branding CS First Boston. 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, which include UBS and Goldman Sachs.
For the latest and more interesting financial news, keep reading Indiatimes Worth. Click here
