Credit Suisse's plan to lay off 500 people is part of a streamlining of its roughly 20,000 member investment banking businesses, sources familiar with the situation said last week.
Earlier last week, Credit Suisse said that it would lay off about 150 professionals in the U.K., in accordance with market conditions and reduced client needs.
The cuts were implemented across the investment bank's global securities department within its investment banking division. Over the next year, however, the bank said it expects to invest in areas targeted for revenue growth, notably algorithmic trading, emerging markets, commodities, derivatives, life finance and prime services. It also said it would hire several hundred people to support those areas.
At press time, Credit Suisse was preparing to announce a major streamlining of its global structured finance business as well, although the bank was tight-lipped on its future plans.
Sources close to the bank, however, said that several origination and trading business areas, including residential ABS, asset finance, CDOs and CMBS trading (CMBS origination will remain separate) will be integrated under one group and one executive across all regions globally.
"They all had separate teams, and they were duplicating efforts," said a market source familiar with Credit Suisse. In keeping with the changes in its businesses, the bank had already begun cutting personnel last week. Sources say they expect the new structured finance group to streamline the way in which it delivers capital markets funding to its clients, as well. Unconvinced that the ABS and MBS markets will return to the days when securitization machines structured massive deals for issuers and investors, Credit Suisse will likely adapt a model wherein it provides restructuring finance, smaller structured finance deals and distressed trading, said that source.
Because Credit Suisse has access to capital and does not need to raise third-party capital, it will probably deploy its funds in distressed assets fairly aggressively.
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