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Business

Credit Suisse to shed over 5,000 jobs

Latest update : 2008-12-04

Credit Suisse, Switzerland's second-largest bank, announced plans to lay off 5,300 jobs worldwide, equivalent to 11% of its workforce, after posting quarterly losses worth 1.95 billion euros.

AFP - Swiss banking giant Credit Suisse said Thursday it would slash 5,300 jobs in a bid to save 2.0 billion Swiss francs (1.65 billion dollars), as it sustained further losses due to the financial crisis.
   
Net loss at the end of November reached 3.0 billion francs due to "a significant pre-tax loss" in its investment banking unit, it added.
   
In view of the negative performance, the chairman, group chief executive and investment bank chief executive said they would give up their bonuses for the year.
   
Credit Suisse, Switzerland's second biggest bank, has until now fared better than its peer UBS, with asset writedowns reaching only about 12 billion francs.
   
But losses are beginning to pile up at Credit Suisse, with the latest profit warning following a 1.261-billion-franc loss for the third quarter.
   
On Thursday, the bank said the loss at the end of November reflected "the impact of adverse market conditions in the quarter and costs associated with the risk reduction program, primarily in investment banking."
   
But it added that it had been "modestly profitable" in November and benefited from "solid asset inflows" in its private banking unit.
   
It also stressed that its capital position remains strong, with its tier 1 ratio -- a measure of capital adequacy -- expected to stand at 13 percent as of end 2008.
   
Nevertheless, the bank said it would eliminate 5,300 jobs from its work force of 51,300 between now and the first half of 2009.
   
Most of the cuts would come in the investment banking unit and would mean a savings of 2.0 billion Swiss francs.
   
"These actions will better position us to weather the continuing challenging market conditions, capture opportunities that arise amid the continuing disruption and prosper when markets improve," Credit Suisse chief executive Brady Dougan said in the statement."
   
But analysts appeared skeptical.
   
Analysts at the Zuercher Kantonalbank said they would slash their earnings forecast for the bank.
   
Bank Wegelin said in a note to clients that there were few details on how the bank sustained these losses and its remaining risk positions.
   
"The bank balance sheet is a black box with many remaining unknowns," said Wegelin, adding that the announcement therefore did not inspire confidence.
   
Credit Suisse shares rose 3.8 percent to 28.75 francs on the Swiss Market Index, outperforming an overall market which was up 1.32 percent.

Date created : 2008-12-04

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