Credit Suisse Group announced yesterday that it will cut about 1,500 more staff globally and reorganize its securities unit after reporting weak third-quarter net profits of 683 million Swiss francs (US$785 million).
Switzerland’s second-biggest bank said it will cut 3 percent from its 50,700 staff globally by the end of 2013 in a quarterly report that follows weak earnings across the banking industry this season because of low trading activity.
The results were a 12 percent improvement over a year ago in the same quarter when Credit Suisse reported exceptionally weak net profits of 609 million francs.
They were helped by an accounting gain from widening credit spreads, the bank said in a statement.
However, analysts had predicted Credit Suisse might report earnings of about SF900 million or more this quarter.
“The performance was below our expectations,” chief financial officer David Mathers told reporters.
He said the “incremental 3 percent reductions” would fall evenly across divisions.
The staff reductions come on top of previous cuts announced in July when the bank reported it would eliminate more than 2,000 jobs after quarterly profits dropped by half, more than expected, because of a strong Swiss franc and a plunge in trading and investment banking earnings.
CEO Brady Dougan said the third quarter presented “a challenging environment with a high degree of uncertainty, low levels of client activity across businesses and extreme market volatility.”
Despite warning that these challenges could persist, he said the job cuts and other cost savings and business strategies made the bank “well equipped for this environment” and give it “substantial opportunity for growth and stronger performance as economic and market conditions improve.”
Separately, Denmark’s biggest bank, Danske Bank, said yesterday it would slash 2,000 jobs as part of a program to cut costs by 10 percent or 2 billion kroner (US$370 million) over three years.
“Results are under pressure because of the financial crisis, new regulation and high funding costs. To improve earnings, we focus on our expenses. The group aims to reduce operating expenses by 10 percent from 2012 to 2014,” the bank said in a statement.
Danske Bank said a “substantial number of the reductions” would be made without redundancies, through retirement and optional departures.
The bank said it had registered a net profit of 1.5 billion kroner for the first nine months of this year. It said earnings during the period were “adversely affected by low interest rates, low economic growth and turbulent capital markets.”
Total income for January--September was 31.5 billion kroner, down 11 percent from the same period a year ago, “mainly because of lower net trading income and a loss on the insurance business.”
“Our third-quarter results suffered from the intensified financial turmoil,” CEO Peter Straarup said.
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