“We’re actually shedding some of the higher-cost staff,” said Chief Financial Officer David Mathers, adding that requests from regulators to increase salaries and deferred bonuses as a proportion of total pay has hurt flexibility. “Unfortunately the consequence is that in order to reduce costs at the investment bank you have to do things like job cuts.”
Credit Suisse earlier today said it will cut about 1,500 more jobs after its securities unit reported its first quarterly loss since 2008. They will be more evenly split across the Zurich-based company’s divisions whereas the investment bank will bear the brunt of the 2,000 job losses announced in July, Mathers said.
Credit Suisse’s compensation-to-revenue ratio at the investment bank, adjusted for one-time items, rose to 70 percent in the third quarter from 50 percent in the second quarter, JPMorgan Chase & Co. analyst Kian Abouhossein estimated.
Mathers’s comments echo Tom Naratil, his counterpart at larger Swiss rival UBS AG (UBSN), who last week said the bank will need to consider all ways to cut costs, including sharing services and contracting out work, as the flexibility to cut bonuses diminishes. UBS’s headcount at the investment bank may decline as the Zurich-based company reorganizes the unit, though “massive layoffs” could be avoided, he said.
UBS’s compensation-to-revenue ratio, excluding the $2.3 billion loss from unauthorized trading and accounting gains from the widening of its own credit spreads, rose to 89 percent in the third quarter from 58 percent in the second. More than 60 percent of total UBS bonus accruals in the third quarter came from awards that had been deferred in the previous years.
To contact the reporter on this story: Elena Logutenkova in Zurich at firstname.lastname@example.org
To contact the editor responsible for this story: Frank Connelly at email@example.com