March 11, 2015 – Credit Suisse’s new boss Tidjane Thiam could cut almost 3,000 jobs from its investment bank, or 15 percent of staff, as part of a shift of capital away from trading desks to private banking in Asia, analysts said.
Thiam could cut 150 billion Swiss francs (US$149.34 billion) of assets from the bank’s fixed income, commodities and currencies (FICC) business under a plan to focus more on private banking in Asia and less on investment banking, analysts at JPMorgan said.
Thiam could cut the number of staff in the investment bank by 2,900 to about 16,500 to save costs, JPMorgan analyst Kian Abouhossein said in note to clients on Wednesday.
Credit Suisse said on Tuesday Prudential boss Thiam would take over as chief executive after current CEO Brady Dougan leaves in June.
The news prompted an 8 percent rally in Credit Suisse shares on Tuesday, and by 0500 ET they had added another 1.8 percent to 25.4 francs.
Abouhossein raised his rating on the stock to ‘outperform’ from ‘underperform’ and set a 28 franc price target.
“We believe the new CEO is RoE (return on equity) driven and in our view could come with a mandate to grow Credit Suisse private banking in Asia,” Abouhossein said, saying shrinking the investment bank’s assets would also improve its leverage and address concerns about the bank’s capital strength.
On a risk-adjusted basis, assets in the investment bank could drop by 50 billion to 100 billion francs, he estimated.