Credit Suisse to slash jobs after $2.5 billion loss

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By Lisa Jucca

ZURICH (Reuters) - Swiss bank Credit Suisse said on Thursday it was cutting another 5,300 jobs, as it revealed it made a net loss of about 3 billion Swiss francs ($2.5 billion) in October and November.

In an update on its fourth-quarter performance to the end of November, the bank said the loss, primarily in investment banking, where most of the job cuts will fall, was due to adverse market conditions and risk reduction.

More than 100,000 jobs have been lost in the financial industry as banks across the world slash costs to cope with the worst financial crisis since the Great Depression.

"Investment banking had a significant pretax loss, reflecting the challenging conditions in the financial markets in the quarter and the costs associated with risk reduction," Credit Suisse said in a statement.

In addition, it will take a restructuring charge of 900 million Swiss francs, mostly in the fourth quarter.

Analysts at Wegelin said in a research note: "Restructuring costs are not yet included. Thus, the total fourth-quarter loss could well be closer to 4 billion francs."

On the brighter side, Credit Suisse said in November alone it was modestly profitable, and it also said its private banking segment was still seeing asset inflows and had hired 370 relationship managers this year.

Having fallen 9 percent on Wednesday, Credit Suisse shares reflected the positives, climbing 6 percent to 29.38 Swiss francs by 0900 GMT, while the DJ Stoxx index of European banking stocks <.SX7P> was up 1.7 percent.

"We should have expected this. The Credit Suisse stock was already indicating something, as it performed significantly worse recently than UBS," said a trader.

Traders say investors are looking more critically at Credit Suisse since the Swiss state bailed out rival UBS , which was badly hit by the credit crisis and has made more writedowns than any other European bank.

When the rescue package for UBS was announced in October, Credit Suisse said it did not need government help.

NO BONUS

"The good news is that the loss occurred in October, and in November the bank was already profitable," said Georg Kanders, an analyst with WestLB.

"The company is not sitting still; they are carrying out a cost reduction. It is impressive how they have reduced risk, and they say they have quite good net new money."

Echoing a similar move at UBS, the bank also said that, given its performance to date, "it would not be appropriate" for its chairman, its chief executive officer and the head of its investment bank to receive any bonuses for 2008.

Credit Suisse said most of the job cuts, representing 11 percent of its total headcount of 50,300, would take place by the end of the first half of 2009 and would be implemented "across all divisions throughout the bank."

The investment banking business will bear two thirds of the cuts, bringing its staff to 17,500 by the end of 2009 from 21,300 at the end of the third quarter.

The cuts, along with other measures, should save 2 billion Swiss francs, or about 9 percent of the cost base.

In addition it said it would axe 1,400 contractors.

It has already cut 1,800 jobs this year. A spokeswoman said the new cuts included 650 investment banking jobs in Britain and 170 jobs in Asia already announced this week .

"For a long time it looked like Credit Suisse was Mr Clean as far as the credit and finance crisis was concerned, but the latest market turbulence has shown that both of the major (Swiss) banks are affected," a trader said.

UBS said in October it was cutting another 2,000 jobs at its investment bank, in addition to 4,100 positions it cut earlier in the year, to reduce the unit's workforce by about a quarter to 17,000, and its total headcount to under 80,000.

Credit Suisse said it has aggressively reduced risk-weighted assets and was aiming to bring them down to $170 billion by the end of the year from $236 billion at the end of 2007, and to $135 billion by the end of next year.

The bank also said it expected its Tier 1 ratio, a measure of its financial strength, to be around 13 percent at the end of this year, one of the strongest in the industry.

(Additional reporting by Rupert Pretterklieber; Editing by Will Waterman)

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