Credit Suisse will reduce work force

ZURICH - Credit Suisse Group AG, the second-biggest Swiss bank, plans to cut about 2,000 jobs after second-quarter profit fell 52 percent on lower earnings from trading.

Net income dropped to 768 million Swiss francs ($959 million) from 1.59 billion francs in the year-earlier period, the Zurich-based bank said on Thursday. That missed the 1.06 billion-franc average estimate of 16 analysts surveyed by Bloomberg.

Chief Executive Officer Brady Dougan is reducing the work force by about 4 percent to help the bank save about 1 billion francs in annual costs from next year, after increasing staff numbers in 2010 to win market share. Earnings at the investment bank tumbled as Europe's sovereign debt crisis and concerns over the global economic outlook increased risk aversion among clients.

"The markets were very challenging in the second quarter," Dougan said in an interview on Thursday, adding that it's "hard to say" when conditions may improve. "Clearly things continue to be challenging."

Credit Suisse has fallen 22 percent in Zurich trading this year, compared with the 12 percent decline in the 46-member Bloomberg Europe Banks and Financial Services Index, and a 14 percent slump at UBS AG, Switzerland's biggest bank.

Pretax profit at the investment bank dropped 71 percent to 231 million francs in the quarter as revenue from sales and trading of stocks, bonds, currencies and commodities tumbled 41 percent. The private bank, which caters to wealthy clients, reported a 3.6 percent decline in earnings to 843 million francs. Profit from asset management jumped to 202 million francs from 22 million francs.

"The trading environment has been difficult in the second quarter," said JPMorgan Chase & Co analyst Kian Abouhossein in a note before the release. "June in particular has been a difficult month for fixed-income, currencies and commodities trading, in our view, due to continued volatility and lack of client activity."

The biggest job cuts will occur at the investment bank, said Chief Financial Officer David Mathers. About 500 jobs will be eliminated in Switzerland, he said.

"Our performance in investment banking was below our expectations," Dougan said in a statement.

Bloomberg News

(China Daily 07/29/2011 page16)