Credit Suisse is putting itself on an even tighter budget, deepening already-planned cuts to slice an additional 1 billion Swiss francs ($1.1 billion) from its expenses. As it does so, it will cut additional jobs and possibly sell off its ETF business, seeking to make up for a plunge in profits of 63%.
Bloomberg reported Thursday that although the investment bank was able to gain from increased bond trading that also boosted profits at its U.S. competitors during the quarter, its private banking business suffered, and wealth management margins hit their lowest level in at least five years.
The bank took an accounting charge of 1.05 billion francs in Q3 that drove down its profits; the charge came because of an accounting rule governing the theoretical cost of debt buyback in a fluctuating market.
Reuters reported that even though the bank is already slashing 3,500 jobs—amounting to 7% of its staff—additional job cuts are planned, although Credit Suisse did not say how much higher the total would rise. CFO David Mathers said in the report that the bank has already combined the operating platforms of its private banking and investment banking units, and it will increase the rate at which it moves information technology jobs to Poland and India to continue to cut costs.
The bank is seeking a total cost savings of 4 billion francs by 2015. That’s up from the target of 3 billion francs set in July and double its earlier estimate of 2 billion.
“The only positive surprise is investment banking, where Credit Suisse achieved strong revenues in fixed income and advisory, in line with what we have seen at the U.S. banks,” Kepler Capital Markets analyst Dirk Becker said in the report. He added, “But in wealth management the malaise continues.”