Credit Suisse cut jobs as profits plunge

Swiss banking giant Credit Suisse said Thursday it would slash around 2,000 jobs after it reported a 52 percent plunge in second quarter profit due to Europe's debt crisis and global economic fears. Net profit for the three months ending June fell to 768 million Swiss francs ($957 million, 667 million euros) from 1.6 billion francs a year ago, amid a "disappointing performance" by its investment bank unit. Pre-tax income for the investment bank slumped 71 percent compared with the second quarter last year. Concerns over the European debt crisis and weakening global economic indicators led to weak client demand and a poor trading environment, said the group. In addition, the strong Swiss currency took 348 million francs off pre-tax income compared with a year ago. The slowdown was also felt in the amount of new assets that the bank was able to attract during the quarter. Net new money declined 25.1 percent from a quarter ago, reaching just 14.3 billion francs during the three months ending June. "In order to ensure attractive returns in the face of an uncertain and challenging economic and market environment, we continue to be proactive about seeking cost efficiencies across the bank," said Brady Dougan, chief executive of the group. Credit Suisse said it was therefore planning to slash four percent of its headcount across the group as part of a programme to save one billion francs in costs through 2012. The group employed 50,700 full-time employees at the end of the second quarter, according to its earnings statement, suggesting that slightly more than 2,000 jobs would be lost. About 500 redundancies are expected in Switzerland alone, with cuts to affect the investment bank unit mainly, said David Mathers, chief financial officer of the group. He added Credit Suisse had already "started to implement" the cuts in Britain, and that growth areas and fast-growing markets would be less affected by the planned reductions. The cost cuts were a "necessary response to this environment," said Mathers. Credit Suisse's announcement came on the heels of its cross-town rival UBS, which said it would reduce headcount so as to save 1.5 to 2.0 billion francs over the next two to three years. UBS however did not give specific figures on post reductions. Elsewhere, British group Lloyds earlier announced 15,000 cuts while US financial giant Goldman Sachs said it would axe 1,000 employees. Bank Wegelin analysts said Credit Suisse's results raise "more questions on what is the point of the investment bank." Bank Helvea analyst Peter Thorne meanwhile said the "immediate outlook from Credit Suisse can best be summarised as dire." He added that while Credit Suisse's cost saving plans were about half those of UBS, "arguably, the problems are of the same scale." Stocks in Credit Suisse fell 2.46 percent to 28.54 francs at mid-day trade, underperforming the overall Swiss Market Index, which was down 0.85 percent.