Credit Suisse is poised to cut more than 10 percent of its European investment bankers this year, having let hundreds of staff go to London and Zurich last month, according to people familiar with the move.
The crisis-hit Swiss lender announced in October that it planned to cut 9,000 roles worldwide over the next three years from a workforce of 52,000. But those plans have stepped up in recent weeks as the bank prepares to announce its second consecutive annual loss next month.
Analysts expect a wave of severe job cuts at investment banks around the world, following Goldman Sachs, which began plans to fire more than 3,000 staff this week.
Income from investment banking has been hit hard in the past year and lenders are under pressure to cut costs, as they have lost jobs over the past two years.
Credit Suisse is under more acute stress than its peers, having experienced large client withdrawals in October following social media rumors about its financial health and has posted monthly losses for the past three years.
The initial wave of 2,700 global redundancies in December included 540 job cuts in Switzerland and 200 in London.
Credit Suisse employs more than 5,000 people in London and 16,000 in Switzerland.
Consultations on the next round of redundancies began before Christmas, with more than 10 percent of investment banking jobs in Europe being discussed, according to people familiar with the talks. A final decision is expected next month.
The lender employs around 17,000 investment bankers worldwide, with main centers in New York and London.
At some of Credit Suisse’s smaller European outposts, nearly a third of jobs are under threat as the bank restructures operations in hopes of eliminating overlapping roles and front office positions.
Many investment bankers who survived job cuts at Credit Suisse’s New York office, the main hub outside Europe, have the prospect of joining the planned First Boston spin-off, which will be led by former Credit Suisse director Michael Klein.
But there is less certainty about the role of investment banking in Europe, as First Boston will be centered on the US market.
“It is difficult to know where we will fit in, although it is clear that European activities will be slimmed down over time,” said one European-based banker. “We’re in a wait-and-see mode.”
Managers have another lever when it comes to managing the cost of cutting the bonus pool, which was reduced by a third last year.
Some Credit Suisse investment bankers are expecting big bonuses this year, as the bank’s annual loss is due to be reported next month.
But senior managers are eager to incentivize wealth managers with strong personal relationships with clients to avoid undermining competitors as well as staff working on critical projects.
“I expect the bonus on my team to be close to zero,” said one Credit Suisse dealmaker.
“But for the people at the top of the private bank, they’re going to get a lot of attention and they’re going to try to hold back as much as they can.”
In just three weeks in October last year, wealth management clients withdrew SFr63.5bn ($68bn) from Credit Suisse, equivalent to 10 per cent of assets.
By comparison, UBS experienced 10 percent outflows in one year during the global financial crisis.
Credit Suisse chairman Axel Lehmann told the Financial Times last month that the withdrawals had been completed and clients were returning to the bank.
Credit Suisse declined to comment on the prospect of further job cuts or the bonus policy.