Credit Suisse’s next chief executive, Tidjane Thiam, could cut almost 3,000 jobs from its investment bank, or 15 per cent of staff, as part of a shift of capital away from trading desks to private banking in Asia, analysts said.
Thiam is expected to cut 150 billion Swiss francs (139 billion) of assets from the bank’s fixed income, commodities and currencies (FICC) business and focus more on private banking in Asia, analysts at JPMorgan said.
He might also cut the number of staff in the investment bank by 2,900 to about 16,500 to save costs, JPMorgan analyst Kian Abouhossein said in note to clients yesterday.
Credit Suisse said on Tuesday Thiam, the chief executive of UK insurer Prudential, would take over from current CEO Brady Dougan after Dougan leaves in June.
Dougan has been criticised for not cutting back the investment bank hard enough, leaving it more reliant on trading revenues than domestic rival UBS and most other European banks.
“With new management comes the potential for a new strategy. Given the incoming CEO’s background, we expect an emphasis on asset-based annuity income streams (wealth management), probably a focus on emerging markets, and a further reduction in the investment bank,” said Matt Spick, analyst at Deutsche Bank.
Credit Suisse has cut the size of its investment bank by 22 per cent in recent years, below the 56 per cent reduction at UBS and also less than the cuts at Barclays (37 per cent) and Deutsche Bank (28 per cent), according to Goldman Sachs.
Cutting investment bank assets would address concerns about capital strength, leverage and Credit Suisse’s reliance on volatile investment bank revenues, analysts said.
Daniele Brupbacher, analyst at UBS, said Credit Suisse could need a share issue and estimated that accelerating and deepening cuts in the investment bank could improve its core capital adequacy ratio to assets by up to 1.5 percentage points.
Banks remain under pressure from tougher rules that have forced them to hold more capital to cover potential losses in trading activities, making those businesses less profitable.
Switzerland has said its big two banks should also have higher leverage ratios than rivals, adding pressure on Thiam to cut trading desks.
Abouhossein, who raised his rating on Credit Suisse stock to ‘outperform’ from ‘underperform’, estimated Thiam will cut the capital allocated to the investment bank to 39 per cent of the bank from 53 per cent.
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