Credit Suisse posts $2.4 billion loss, plans more job cuts

Credit Suisse on Tuesday reported a net loss of 2.4 billion Swiss francs (2.2 billion euros, $2.3 billion) in 2016, after agreeing to a massive settlement with US authorities over its role in the sub-prime crisis.
Switzerland's second biggest bank also said it planned to cut between 5,500 to 6,500 more jobs in 2017 as chief executive Tidjane Thiam presses on with a major effort to reduce costs. In a statement, Credit Suisse said its net loss was narrower than a year-earlier figure of 2.9 million Swiss francs. "2016 was the first full year of implementing our new strategy and it was a challenging and busy 12 months," Thiam said.
"We have significantly reduced our fixed operating cost base and increased our operating leverage." Last month, the US authorities announced a $5.28 billion settlement with Credit Suisse over its role in the sale of the kind of toxic securities that led to the global financial crisis of 2008. Federal prosecutors say Credit Suisse has admitted that between 2005 and 2007 it knowingly deceived investors in the sale of complex securities derived from residential mortgages. The system-wide failure of such securities in 2008 caused a cascading wave of bankruptcies and crises that touched off the Great Recession, which cost tens of millions of jobs around the world.
"We have reached an agreement with the US Department of Justice on the matter, thus removing a major source of uncertainty for our future," Thiam said on Tuesday. With the bank's US case resolved, Thiam can redouble attention on a reform effort he laid out after taking charge of Credit Suisse following a stint leading insurance giant Prudential. Thiam wants the bank to focus more on wealth management and de-emphasise its riskier investment banking operation. But he also prioritised trimming operational spending. The expected job losses announced Tuesday will add to the 7,250 positions cut in 2016, mostly in New York and London. Boosting capital is another top Thiam priority, and much attention has been focused on tentative plans for an initial public offering for its Swiss unit.