Given that the Swiss bank’s shares have fallen 40% since CEO Tidjane Thiam took over Credit Suisse three-and-a-half years ago, the fact that he has managed to hang on is a small miracle. But with shareholders growing ever more anxious as CS’s shares have slumped nearly 30% YTD, the embattled CEO is now taking a page out of Wells Fargo’s book and resorting to a tried-and-true strategy for boosting profits: Staff cuts.
Ahead of an investor day set for next month, Thiam is expanding his yearslong drive to cut costs by announcing possibly hundreds of job cuts, with some of the dismissals potentially beginning before the end of the year. The dismissals, Bloomberg said, will help the bank achieve its 2019 expense targets. Amazingly, while the bank’s struggling trading business won’t be effected, the cuts could come from its International Wealth Management and Swiss Universal Bank businesses, which have historically been money-makers for the bank. More confusing still, Thiam has said he doesn’t plan to cut any more trading jobs, while acknowledging that wealth management has been a money maker for the bank.
In a separate report, Wells confirmed that it’s planning to cut 1,000 jobs in the US, including 400 workers in Des Moines, Iowa, according to the Des Moines Register.
Thiam’s decision to raise billions of francs in capital by offering new shares hasn’t helped the banks’ shares, and the volpocalypse blowup that killed XIV (which CS created) in February stoked fears of lawsuit-related payouts (despite being the largest shareholder of the ETN, the bank has insisted that it had been ‘completely hedged’).
But Thiam, who has cut some $4 billion of costs since the bank’s “restructuring” began in 2015, will still need to explain to investors next month how he plans to boost revenues as his pivot to emerging markets and wealth management has produced only tepid returns.
If Thiam doesn’t figure it out soon, he could be the next CS employee to pack all of his stuff into a cardboard box and turn in his security pass.
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