Credit Suisse to lay off New York employees as it shuts hedge fund division
Credit Suisse is starting the year on a sour note, with the bank disclosing Monday that 69 New York staffers will be shown the door.
The pink slips are in a division that served hedge funds and which is being wound down after Archegos Capital Management collapsed last year, sticking the bank with a $5 billion loss. New management vowed to stop lending to hedge funds or processing their trades, a typically lucrative business dominated by Morgan Stanley, Goldman Sachs and JPMorgan.
Layoffs at Credit Suisse will begin March 6, according to a filing with the New York state Department of Labor, and the prime services division will close by August. The bank declined to comment.
Credit Suisse’s misfortune contrasts with most banks, which enjoyed an extraordinarily robust 2021. The average Wall Street bonus is expected to set a record of $210,000 per person.
But at the Switzerland-based bank net income fell by 86% over the nine months ending last Sept. 30, to $475 million, and its investment-banking division posted a nearly $2 billion pretax loss. Results were weighed down by regulatory charges, litigation costs and hedge-fund-related losses. In addition to the Archegos fiasco, the bank wrote down its stake in Manhattan-based York Capital Management by about $125 million after taking a $450 million loss in 2020.
Credit Suisse said that the fourth quarter of 2021 would be unprofitable because it expects to take a $1.6 billion writedown related to its acquisition of investment bank Donaldson Lufkin & Jenrette. Credit Suisse acquired DLJ 22 years ago.
The bank had 7,500 New York employees in 2017, according to figures from eFinancialCareers, about one-seventh of its workforce. In November management said that in recent years it had cut capital allocations to the investment-banking division almost in half and was focusing on serving wealthy clients. All employees were being asked to speak up if something was amiss.
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