Credit Suisse to cut 6,500 jobs in 2017 after $3.44 billion loss for 2016

Credit Suisse to cut 6,500 jobs in 2017 after $3.44 billion loss for 2016
PHOTO: Reuters

Credit Suisse reported a net loss of 2.347 billion Swiss francs (S$3.31 billion) for the fourth quarter of 2016, as the bank felt the impact of a US$5.28 billion fine from the US Department of Justice.

The fine in December stems from the bank's sale of toxic mortgage assets in the lead up to the 2008 global financial crisis and brings an end to a "major source of uncertainty" for the bank, according to Chief Executive Tidjane Thiam. It said Tuesday it recorded a provision of approximately US$2 billion during the fourth quarter of 2016 for this penalty, in addition to existing provisions of $550 million in prior periods.

The fourth-quarter profit loss failed to match expectations in a Reuters poll of economists. However, with a beat on its pre-tax number, shares rose 2.6 per cent higher Tuesday by mid-morning trade. For the whole of 2016, the bank reported a net loss of 2.438 billion Swiss francs, versus a 2.944 billion Swiss franc loss in 2015.

The bank did achieve full-year net cost savings of 1.9 billion Swiss francs, it said, ahead of projections set out by the bank in its overhaul strategy. It also stated that it would further reduce its headcount in 2017 by 6,500 jobs.

Speaking to CNBC Tuesday, Thiam said that the outflows suffered by the bank in 2016 derived from two blocks: Seasonal and strategic.

"Some of that was seasonal, about 1.6 million Swiss francs, which we see every year in Switzerland and which is a multitude of mortgages, taxes etc."

"About 3.4 (million Swiss francs) was our programme because we are exiting external asset managers … And the rest is Latin America, where we have a regularization programme. We did it in Europe, we're now doing it in Latin America, but I see all that as investment for the future."

So far in 2017 the bank is seeing positive inflows, which Thiam attributed largely to its advisory work. Thiam said the bank had had a "good January" and he remains "cautiously optimistic" for the year ahead.

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