Hire Wire Jul 28 2011

Credit Suisse to Cut 2,000 Staff

By kyle stock

Credit Suisse added 600 workers in the second quarter but pledged to cut 4% of its staff by the end of the year.

The company increased total headcount by 1.2% to almost 51,000 in the three months ended June 30, with most of the increase coming from staff acquired when it bought a hedge-fund administration business from ABN Amro.

However, the Swiss bank will cut about 2,000 of those jobs as part of a sweeping mandate to lower spending, according to its earnings release this morning.

"In order to ensure attractive returns in the face of an uncertain and challenging economic and market environment, we continue to be proactive about seeking cost efficiencies across the bank," CEO Brady Dougan said in a statement.

Credit Suisse recognized 142 million Swiss francs in severance costs for investment bank layoffs in the quarter, and it expects to spend an additional 258 million to 308 million on restructuring by the end of the year.

The investment bank, hamstrung by dismal trading volumes and a strong Swiss franc, posted by far the most disappointing results of the group, with a 71% slide in income from the year-earlier period.

Credit Suisse has also slashed average compensation. In the first half of the year, it set aside 140,533 Swiss francs per employee, almost 19,500 less, or 12%, than it did in the first two quarters of 2010.

Overall, the firm's results fell far short of analyst estimates. It posted 768 million Swiss francs in profit for the quarter, less than half of its prior-ear profit of 1.59 billion. Analysts estimated earnings of 1.03 billion Swiss francs for the quarter, according to a Dow Jones Newswires poll.

Write to Kyle.Stock at kyle.stock@dowjones.com

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