Head resigns as CS Holding cuts 5,000 jobs

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The Independent Online
A row within the board of CS Holding, the Swiss banking giant, burst into the open yesterday as Josef Ackermann, president of its Credit Suisse subsidiary, resigned due to "differing views" on the same day as the bank announced a world-wide restructuring exercise involving 5,000 job cuts.

The restructuring of CS Holding, which is number two in Switzerland after United Bank of Switzerland and the parent of Credit Suisse and CS First Boston, will cost SFr1bn (pounds 500m). The bank will change its name to Credit Suisse Group in January next year.

At the same time, CS Holding chairman Rainer Gut, who courted controversy by suggesting a merger with rival UBS barely three months ago, will remain chairman of the new group.

CS Holding declined to enlarge on the reasons for the departure of Mr Ackermann, who had been president of the executive board at Credit Suisse and a member of the CS Holding board.

Lukas Muehlemann, who successfully restructured Swiss Reinsurance, will leave his chief executive's post there to take the helm at the restructured Credit Suisse Group.

The bank added that the job losses, including 3,500 in Switzerland, will happen over the next two to three years and will take place mainly by non-replacement of staff who leave.

At the end of 1995, CS Holding and its subsidiaries had a workforce of almost 24,000 in Switzerland and a further 10,000 operating world-wide.

In a key move, the group will be divesting non-core activities, chiefly a 44.9 per cent stake in Swiss engineering and electricity group Elektrowatt. The proceeds from its disposal will go towards the restructuring costs.

CS shares rose sharply in early trading on the Zurich bourse after the announcement yesterday morning.

Analysts welcomed the announcement as a big step towards transparency and focus from a company whose current mixed character had prompted some caution among investors.

Christoph Bieri, at Zurich Kantonalbank, said: "It is an extremely far- reaching restructuring that is very modern, the same direction that the other two big Swiss banks [UBS and Swiss Bank Corporation] are moving in."

Under the plan announced yesterday, CS Holding will be realigning its businesses into four specialised and autonomous units.

The new divisions will be created from the group's existing financial companies - Credit Suisse; Swiss Volksbank, a Swiss domestic bank; Bank Leu, the private banking unit; Credit Suisse Financial Products and New York-based CS First Boston.

The four new units will be Swiss domestic banking, worldwide private banking, world-wide asset management and world-wide corporate and investment banking.

The company estimates the new structure, which will take effect on 1 January 1997, will slash annual costs by around pounds 350m. From 1998, the plan will boost annual revenues by about the same amount.

"By this move, CS Holding will change from a Swiss bank with international activities to an international financial institution with headquarters and certain core businesses in Switzerland," the company said.

CS Holding, which is regularly ranked among the world's leaders in market activities such as bond issues or equity trading, had total assets of SFr412.7bn at the end of 1995.