The cull aims to reach an annual rate of SFr1bn (£763m) this year, but it will also incur costs of SFr400-450m as the bank is forced to pay off redundant bankers. The investment bank has already seen its payroll cut, incurring SFr142m in severance fees in the second quarter.
The cuts come on the back off a 19 per cent fall in revenues for Credit Suisse, resulting in a pre-tax operating profit of SFr1.1bn during the second quarter of this year, down 40 per cent on the same period last year.
Its pre-tax income margin went in the wrong direction, falling from 22.2 per cent to 17.2 per cent for the group – a far cry from its 28 per cent target.
The overall results were dragged down by Credit Suisse’s investment bank, which suffered from both over-hiring and a collapse of trading and sales revenues.
The investment bank boosted its headcount by three per cent on last year to 21,300, a hiring binge that the bank is now having to reverse.
As City A.M. reported at the beginning of July (see inset), a consultation has begun in Credit Suisse’s UK investment bank to lay off hundreds of staff there this year.
By contrast, investment bank revenues fell by 31 per cent to SFr2.8bn while its cost-to-income ratio soared to 91.3 per cent, versus 80.5 per cent in the second quarter of last year. Fixed income was worst hit: revenues plunged 59 per cent to SFr595m as investors decided to sit tight through the Eurozone crisis rather than trade. Equity sales and trading revenues also dropped by 26 per cent year on year to SFr1.3bn.