Credit Suisse: Cutting in technology, hiring in risk & compliance
After issuing a profit morning earlier this month, Credit Suisse has already said that it wants to cut some jobs. Today, it has an investor day outlining its plans.
There's no explicit mention of the c word, but if you're working in technology as a non-developer and are responsible for "processing" tasks in Switzerland, London, or New York, you might want to watch your back. So too if you're an external contractor, or are a senior technology manager working on a decrepit data centre, or a change manager who hasn't managed to change much.
Speaking later today, Joanne Hannaford, the Credit Suisse chief technology officer who joined from Goldman Sachs last year, will explain her intention of trimming CHF600m from the Credit Suisse technology budget, including CHF200m this year and CHF400m next year.
This is to be achieved using the methods outlined in the box below, taken from Hannaford's presentation. Reading between the lines, it sounds like Credit Suisse will be stricter about technology hiring, that Hannaford has unearthed technology people doing similar jobs, that there are too many change teams, too many developers not doing much, too much reliance on status over performance, and too much valuable work done by contractors.
Source: Credit Suisse
Hannaford's presentation also includes the charts below, suggesting Credit Suisse has a lot of technology staff, but not necessarily the right ones. There are far too many non-developers and a lot of time is spent on processing activities. Hannaford wants to change this mix. She also wants to move to a more centralized IT model, which could mean more staff in low-cost locations. She wants to move Credit Suisse to the cloud. And she wants to shift important functions to in-house staff and away from contractors.
Source: Credit Suisse
Adding heads in risk and compliance
While Hannaford is all about cutting costs, today's presentation also stresses the extent to which David Wildermuth, the chief risk officer, and Rafael Lopez Lorenzo, the chief compliance officer, have been adding them.
Lorenzo's presentation shows that Credit Suisse has added 500 new compliance staff since 2019 and hiked spending in the area by CHF130m. This year alone, 22 new directors and managing directors have been added to the bank's compliance function amidst a "war for talent". An entirely new 'compliance organization' has been built. Risk management and controls have been strengthened. A new head of risk technology has been hired, a dedicated counterparty credit risk function has been formed, and 450 people have been moved into the first line of defense in compliance. The list is long.
Ostensibly, all this effort seems to be paying off. After last year's $5.5bn Archegos loss, Credit Suisse has sidestepped any big losses related to Russia.
If costs are being cut, what about revenues? Credit Suisse has big aspirations for wealth management, where it wants to expand its exposure to private markets, to ultra-high net worth individuals and to increase recurring revenues. 10% market growth is expected in APAC, 5% in Europe. Here too, though, there are opportunities for streamlining and business units are consolidated and processes simplified.
What's lacking from today's presentations is a detailed description of what Credit Suisse plans to do with its investment bank. Fixed income traders particularly will need to hope that no news is good news.
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