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Two banks… A lot of cuts

2 Nov

Current job loss figures suggest the Swiss Bank Credit Suisse has faced the full brunt of the European sovereign debt crisis, with the company cutting 1500 jobs, on top of the 2000 cuts announced in July.

And Credit Suisse aren’t the only ones making job cuts… Japanese Normura will be slashing costs by 1.2billion dollars, after seeing losses of 46.1billion yen from a disappointing second quarter.

Both banks performed below expectations, both have been hit hard by anaemic economic recovery in Europe and the US.

So what’s next for Credit Suisse and Normura? Credit Suisse’s chief executive Brady Dougan is busy promoting the banks business model as a more regulated, less profitable climate for investment banking. Mr Dougan plans to reduce risk weighted assets in the fixed income business by 113billion by the end of 2014. To reach this goal, Credit Suisse aim to leave unsecured trades, and decrease its secuitisation businesses, whilst tightening its richest clients, the ultra high net worth individuals. Furthermore, the bank hopes to focus on emerging markets.

Shareholders are remaining cautious. The banks shares fell by more than 8 per cent on Tuesday, resulting in the shares being down 36 per cent for the year.

Meanwhile, Takumi Shibata, chief operating office of Nomura, said the bank “aims to get through these cloudy times with a lower expense base”. At an analysts meeting Mr Shibata asserted that the company would not be shutting down divisions or regions, predicting its healthy balance sheet will allow it to redeploy its resources to build up its franchise again.

As with Mr Dougan’s claims, Mr Shibata has not been convincing analysts, who criticized his optimistic claims. Jun Shiota, analyst at Daiwa Capital Markets in Tokyo said, “Normally things do not work that conveniently. If the market improves they will rebound, but it is unlikely that they can rebound more than their western competitors”.