Credit Suisse's CEO Thomas Gottstein had shared in March that the Swiss bank won’t announce any job cuts because of the pandemic. However, as the situation continues to worsen and the future becomes more uncertain than ever before, the Zurich-based bank could cut “hundreds” of jobs as it thinks over its new savings plan that would allow it to reach its profit targets.
While no decisions on saving have been finalized yet, the CEO is thinking over the many options available. He is examining the possibility of merging the areas of risk and compliance, which grew after the 2008 financial crisis. He is also thinking about thinning out the bank's domestic branch network. As per the report, he could also reverse a decision by his predecessor Tidjane Thiam to split the investment bank into a Global Markets division and an Investment Banking & Capital Markets one.
The banking industry has been struggling since the past year, long before the pandemic hit. The COVID-19 crisis and the subsequent lockdown in many countries has only worsened the economic situation and created challenges for companies across the world and sectors.
Swiss banking sector & the COVID-19 crisis
A few weeks back, the Swiss National Bank (SNB) had warned that the Swiss banks which have weathered the financial impact of the COVID-19 pandemic relatively well so far may face difficult conditions in the coming months.
“The outlook is critically dependent on the evolution of the pandemic and on how authorities, companies, households and the banking sector respond to it,” stated the Financial Stability Report.
With the uncertainty about the economic and financial outlook being unusually high it is recommended to take all significantly worse outcomes into consideration. Even though Switzerland has named five banks including Credit Suisse as “too big to fail”, the leaders of the bank are now mulling over its new savings plan.
How Credit Suisse deals with the situation and strategizes its savings plan to reach its profit targets is to look forward to. It would have to reach these targets with a more robust plan that doesn’t compromise the client and employee experience. Only time will tell if there would be major job cuts as part of the savings plan or not.
Image Credits: Credit Suisse