Credit Suisse Group has announced a restructuring plan that affects its staff and operations. Photo: Shutterstock

Credit Suisse Group has announced a restructuring plan that affects its staff and operations. Photo: Shutterstock

On 27 October, Credit Suisse Group announced it will cut 9,000 jobs and spin off the investment bank. Both decisions are part of an effort to overhaul the company's operations in order to recover from several scandals and billions of dollars in losses.

700 people will lose their jobs at Credit Suisse in the fourth quarter of this year. By the end of 2025, a total of 9,000 jobs will disappear. Credit Suisse Group currently employs around 45,000 people worldwide. With these job cuts, the banking group is seeking to reduce its cost base by $2.5bn--or 15%--by 2025. The bank also plans to cut its consulting costs by 50% and its outsourcing expenses by 30%.

Credit Suisse posted a loss of CHF4bn in the third quarter of this year. Switzerland's second-largest bank also said it recorded a net asset outflow from the group of CHF12.9bn in the period.

The transfer of the investment bank

It has also been reported that the bank is seeking a capital injection of up to CHF4bn. The Saudi National Bank is planning to invest CHF1.5bn.

The Swiss bank also plans to generate 14% of its global revenues from its new investment bank First Boston by 2025. Acquired in 1990 by Credit Suisse and based in New York, First Boston is expected to house the investment banking and advisory businesses of Credit Suisse Group. Following the transfer of these functions, First Boston will enter into a long-term partnership agreement with the Credit Suisse Group. In addition, the credit institution has decided to sell its securitised products unit to US investment groups Pimco and Appollo.

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Red flags

The past few weeks have been turbulent for the banking group, which has found itself in a vortex of negative press headlines. At the beginning of October, Credit Suisse's share price had fallen to around CHF3.55, a drop of 55% compared to the beginning of the year.

On top of this, credit default swap (CDS) spreads were at their widest, at 247 basis points (+15%). A level that the bank had not experienced since 2009 and the great financial crisis of overprime. All these indicators made investors fear a scenario similar to the bankruptcy of Lehman Brothers in 2008.

On 24 October, the banking group agreed to pay the sum of €238m in France in order to extinguish criminal proceedings in the case of illegal canvassing of French clients and aggravated tax fraud and money laundering between 2005 and 2012.

This story was first published in French on . It has been translated and edited for Delano.