Credit Suisse
Ulrich Koerner, who is currently the head of asset management at Credit Suisse, would take over the post of Chief Executive Officer on 1st August 2022. 

Credit Suisse crisis plan – Raise Capital, Layoffs & Focus on wealthy clients

According to the latest reports coming from the banking sector, international investment bank and financial institution, Credit Suisse is planning to raise nearly 4 billion dollars from its investors as shares of the company have been sliding down for the past few weeks. Reports state that the banking company based in Switzerland wants to shift its focus from being an investment banker to offering banking services for its rich clients.

Credit Suisse has been facing various challenges in and out of Switzerland in the form of economic and legal crises. Numerous scandals and long-drawn legal battles in the home country had tarnished the reputation of Credit Suisse which was once considered one of the most successful banking ventures on intern national stage. Credit Suisse has been under investigation for assisting a criminal gang in conducting money laundering activities which are considered a high threat to national security.

The banking company has also been facing an economic and financial crisis as it faced huge losses during the third quarter of the current financial year. In the third quarter, Credit Suisse posted a loss of 4 billion Swiss francs which was considered a red flag by both investors and clients of the multinational banking company.

Axel Lehmann, Chairman of the financial institution said that the latest business plans put forward by the company can be considered as a “blueprint for success”

High volatility in the international market and the negative performance posted by the company forced its clients to pull out funds from Credit Suisse in large amounts. This led to a crisis where the company was not having enough funds to keep up with the regulatory requirements for a banking institution.

Stock prices of the bank, which has hit record lows in the past few weeks, fell as much as 18.6% by the close of trading, valuing the bank at around 10 billion francs.

Job cuts

Along with raising capital and focusing more on wealthy clients, Credit Suisse also has plans to implement large-scale lay-offs which will result in thousands of employees being unemployed. It will cut 2,700 jobs, or 5% of its workforce by the end of this year, and ultimately reduce its workforce by roughly 9,000 to about 43,000 by the end of 2025.

Credit Suisse said it will create a capital release unit to wind down non-strategic, higher-risk businesses while announcing plans to sell a large part of its securitized products business to an investor group led by Apollo.

The bank will also wind down some trading businesses in emerging markets and equities.

There have been rumours in the market that the banking company is selling assets owned by it to keep up high liquidity and stability of the operations. Investors and market analysts are also concerned about the increasing influence of the Saudi Arabian government and royal family in the renowned financial institution.