Credit Suisse to cut 1,500 jobs after weak Q3

November 1, 2011 - 3:40 PM

GENEVA (AP) — Switzerland's second-biggest bank Credit Suisse Group AG said Tuesday it will trim its staff by a further 1,500 globally and reorganize its securities unit despite reporting a modest uptick in year-on-year third quarter profits.

The bank, which currently employs about 50,700 staff around the world, announced the 3 percent across-the-board job cuts by the end of 2013 — on top of earlier plans to trim back 2,000 jobs — as it reported a net profit of 683 million Swiss francs ($785 million). Though that was 12 percent from last year's equivalent of 609 million francs, the boost came from a one-off accounting gain.

The improvement was not as big as many in the markets had been expected. Some analysts had predicted that Credit Suisse might report earnings of about 900 million francs ($1 billion) or more this quarter.

Analysts at Zuercher Kantonalbank noted that pretax profits were lower than expected, even accounting for one-off factors such as the funds set aside for U.S. tax litigation.

Shares of Credit Suisse closed down 8.2 percent at 23.50 francs in Swiss trading Tuesday.

The company admitted the results were disappointing.

"The performance was below our expectations," chief financial officer David Mathers told reporters.

He said the "incremental 3 percent reductions" would fall evenly across divisions. The bank increased its cost savings target from the staff cuts to 2 billion Swiss francs ($2.3 billion), but said those would not be fully realized until during 2014.

In July, the bank reported it would eliminate more than 2,000 jobs after quarterly profits dropped by half due to a strong Swiss franc and a plunge in trading and investment banking earnings.

Chief executive Brady Dougan said the third quarter presented "a challenging environment with a high degree of uncertainty, low levels of client activity across businesses and extreme market volatility."

Despite warning that these challenges could persist, he said the bank was well-positioned to boost growth and record a "stronger performance as economic and market conditions improve."

The Zurich-based bank also said it incurred 291 million francs in restructuring charges.

And it has yet to close the book on a U.S. tax evasion probe. The bank announced it had set aside 295 million francs in connection with that matter. In addition, it said it had set aside 183 million francs (euros150 million) in connection with a German tax probe.