Credit Suisse could split its struggling investment bank into three parts, a move that would involve thousands of job cuts as the Swiss bank reshapes its business.
The bank has drawn up plans to split its beleaguered investment banking unit, including creating a so-called ‘bad bank’ to spin off unwanted assets. Financial Times reported, citing people familiar with the matter.
Credit Suisse aims to spin off unwanted assets at the bad bank, spin off its advisory business into a separate unit and then keep everything else in a third division, the report said. The idea is to avoid raising additional capital to push through radical changes, it added.
Chairman Axel Lehmann installed a new CEO, Ulrich Körner, with a mandate to overhaul its business around a year after a strategy update last October. The bank said in its second-quarter results that it would spin off its securitized products unit and reshape its investment bank around a capital-light advisory model.
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However, it is set to unveil further details of the new strategy during its third quarter results on 27 October. Credit Suisse is trying to recover from successive crises, including a spying scandal against its own staff, a loss of 5.5 billion. USD from the collapse of the family office, Archegos Capital, and its ties to the defunct supply chain finance firm, Greensill Capital.
The Swiss bank has around 45,000 employees and any plans to change the business are expected to result in cuts of at least 10%, or around 4,500 people.
In a statement to FTCredit Suisse said it will reveal an update on its plans during its third-quarter results and that it would be “premature to comment on any potential results before then”.
The bank has continued to hire senior dealmakers for its investment bank over the past year, but employees said Financial news earlier that many employees lose faith in the company and want to leave the company.
Credit Suisse is considering reviving its strategic resolution unit – a division used by former chief executive Tidjane Thiam in a previous strategic switch – to house high-risk and non-core businesses, FT reported.
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