In an effort to reduce costs and reinforce its balance sheet,
Credit Suisse Group
) announced 300 job cuts in Switzerland. The layoffs are a part
of this Zurich-based bank's strategy to achieve CHF 4.0 billion
($4.2 billion) in cost savings by 2015.
The streamlining initiatives also involved combining the
bank's retail and private banking divisions in Switzerland from
January 2013, which will result in the job cuts. The company
anticipates the strategy to lead to cost savings of CHF 50
million ($53 million).
The combined unit is expected to be led by Christoph Brunner,
presently the head of retail operations at Switzerland. Further,
Rolf Boegli, the present operating chief at the private banking
unit, will lead a separate division.
This division will cater to asset managers as well as clients
in Switzerland having roughly $50 million as bankable assets.
However, according to the bank's statements, the present head of
private banking in Switzerland, Arthur Vayloyan, will stand
Management anticipates these measures to help the company
achieve the expected performance standards. Eventually, these are
also expected to secure as well as improve Credit Suisse's market
position. The layoffs plan follow 3,500 job cuts announced
earlier in 2011.
Majority of the global banks are currently struggling to bring
down costs amidst the gloomy macro-economic factors and Eurozone
crisis. These layoffs are an outcome of a challenging operating
environment, which Credit Suisse is facing in Europe.
The sovereign debt crisis has been a matter of concern and the
company resorted to such restructuring measures to address the
issues. Notably, Credit Suisse faced huge headwinds in the
private banking segment in the third quarter of 2012, with
Recently, another Swiss banking giant
) slashed 10,000 jobs with roughly 2500 in Switzerland itself.
The layoffs are part of this bank's efforts to reorganize its
business by developing core businesses and downsizing troubled
units. UBS has been trimming down the workforce in its investment
bank unit over the past year and aims to refocus on building its
market-leading wealth management and asset management
Amidst the stressed operating environment, lower returns and
stringent capital norms, many Swiss banks are rightsizing
businesses to meet the aforementioned challenges. In September
this year, as part of its integration process and cost reduction
Julius Baer Group Ltd.
) also announced roughly 30%-40% reduction in workforce at its
recently acquired foreign wealth management division of Merrill
Lynch − a unit of
Bank of America Corporation
As the near-term outlook of an economic recovery remains
bleak, banks are increasingly adopting rigorous cost-cutting
measures to maintain a sound capital buffer in order to withstand
any financial crisis.
Overall, until revenue generation revives, a worsening
cost-to-income ratio will continue to force many more banks to
reduce costs through job cuts since these institutions need to
enhance profitability in order to boost capital ratios.
Credit Suisse currently retains a Zacks #1 Rank, which
translates into a short-term Strong Buy rating.
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