Credit Suisse Plans To Expand In North Carolina To Cut Costs
Zacks Investment Research | May 09, 2017 09:03PM ET
After staging a turnaround with decent results last month following quarters of loss, Credit Suisse (SIX:CSGN) Group AG (TO:CS) recently hit the headlines with its restructuring initiatives in North Carolina and Asia.
The company plans to employ about 1200 employees in its Raleigh branch, North Carolina. These new positions will be given to people from local areas along with some existing employees of the company working in its other U.S. branches.
Credit Suisse expects to incur lower property and staff expenses through this restructuring. The company plans to invest $70.5 million for this move, of which it is eligible for $40.2 million as total reimbursements through a government grant program.
Some of the other banks that relocated jobs to cheaper locations are Goldman Sachs Group, Inc. (NYSE:GS) , which increased jobs in Utah, and Morgan Stanley (NYSE:MS) , which created opportunities in Maryland.
On the flip side, Credit Suisse is cutting about 35 jobs from its business in Asian equities market, disclosed by a person familiar with the matter. The company’s last quarter’s results witnessed reduced equities trading revenues from the Asia-Pacific region due to a fall in client activity.
The layoffs in trading, sales, prime brokerage and research departments are expected to be completed by June. Also, according to the source, the company is planning to free capital from the equity market in order to invest it somewhere else.
Per the report issued in March by a research firm, Coalition, UBS Group AG (NYSE:UBS) tops the ranking in Asia-Pacific equities by revenues, followed by Morgan Stanley. Credit Suisse, Goldman Sachs and JPMorgan Chase & Co. (NYSE:JPM) share the third position.
Credit Suisse’s initiatives to manage expenses might help it in maintaining profits in the upcoming quarters. Further, the company’s focus on shifting business to areas with growth potential is encouraging.
Shares of the company have gained 10.7% over the last one year, underperforming the Zacks categorized Banks - Foreign industry’s growth of 23.6%.
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