Credit Suisse is already cutting headcount. The Swiss bank has been spied cutting managing directors at its investment bank in Asia. It's also been seen losing all kinds people from its credit sales and trading business globally, but mostly in New York, although this has been down to attrition rather than cuts. And, it's embarked upon a strategy of extracting CHF600m in costs from its technology function in the next two years, which will surely involve job reductions as developers become more productive and manual processes are automated.
But what if none of this is enough?
Swiss newspaper SonntagsZeitung says it's not. In a piece yesterday, it said that as revenues decline, Credit Suisse is coming to realize that its current cost base is still unmanageable. CEO Thomas Gottstein is reportedly already discussing a new cost-cutting plan with the board, ahead of Credit Suisse's second quarter results announcement on Wednesday, when it will announce a loss.
SonntagsZeitung's article is paywalled, but Reuters has seen it and it doesn't sound pretty. "The numbers are catastrophic," an unnamed senior banker at Credit Suisse is quoted as saying. "The cost structure is too large for the bank's revenue potential." Morale is reportedly low.
It's a very different note to that sounded by David Miller, head of Credit Suisse's investment bank in early June. Miller then declared that Credit Suisse was back, and that it had hired 55 managing directors in the past year and planned to hire 40 more. Inside Paradeplatz, however, points out that Miller has historically been a leveraged finance banker, and that leveraged finance is one area where Credit Suisse stands to make a loss.
Credit Suisse isn't commenting on the allegations. If they come, the new cuts may not be announced this Wednesday: they're still being discussed by the board. Which jobs will be most at risk? Here, we refer again to the chart below from JPMorgan's banking analysts. Presuming that Credit Suisse will double down on its wealth management business, anything in its investment bank that doesn't have a strong wealth management connection could be cut. Credit trading and securitization look top of that list.
And if Credit Suisse doesn't make more cuts? The danger then is that it will pay woeful bonuses for the second year running, prompting a further exodus of top staff and a further downward revenue spiral. It's not an easy position to be in, but it need not be terminal: just ask Deutsche Bank.
Separately, Lindsay MacMillan left Goldman Sachs after five years in March 2022, but it sounds like she was making herself popular until that point. Miller, who is now a novelist, tells CNBC that she didn't really enjoy her job as a vice president at Marcus but that she made it better by sending Friday “joy emails" to friends in the office and colleagues around the world. "I would really get energized by just the moments of human connection or feeling like I was bringing a bit of this rebel, joyful energy” from doing those kinds of activities," says MacMillan.
Having started out as an analyst in private credit, Miller moved into brand and content strategy and then into Goldman's Marcus app-based bank. As well as sending joyful emails, Miller says she learned to do less work, to be less of a perfectionist, and to simply become "a good-enough employee” who sometimes left earlier than colleagues.
Meanwhile...
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