Credit Suisse plans more than 5,500 job cuts after quarterly loss

Litigation costs at the bank reached CHF 2.4 billion in 2016 following the settlement with the US Department of Justice.

Credit Suisse has pledged to cut more than 5,500 jobs in 2017 as it reported an annual net loss of CHF 2.4 billion in 2016.

The bank said by the end of 2017 it expects operating expenses to be below CHF 18.5 billion, through an “incremental headcount reduction of more than 5,500 for the year.”

In 2016, Credit Suisse reported full-year savings of CHF 1.9 billion, which included a headcount reduction of 7,250.

However, the recent settlement with the US Department of Justice saw the bank’s litigation costs reach CHF 2.4 billion in 2016, dragging down profits across the business.

Deutsche Bank and Credit Suisse agreed to pay over $12 billion in combined settlements with the Department of Justice in the US last year for selling of toxic mortgage loans between 2005 and 2007.

Credit Suisse is to pay a $2.48 billion penalty and also provide $2.8 billion in consumer relief over the course of the next five years.

Chief executive officer, Tidjane Thiam, explained on the earnings report the settlement has “removed a major source of uncertainty for our future.”

“We believe we are well positioned to continue to make progress with our restructuring program in 2017 and 2018, and to capture profitable growth opportunities across our franchises and geographies,” he added.

Trading at Credit Suisse suffered a 77% decrease in 2016, with revenues totalling just CHF 313 million compared to CHF 1.3 billion the year prior.

The decrease reflected lower brokerage and product issuing fees, lower fees from foreign exchange client business and lower sales, the bank said.