Hundreds of jobs shed at Credit Suisse

| January 28, 2008 | 0 Comments

The current economic climate continues to bite as investment bank Credit Suisse Group has confirmed it will shed some 500 jobs.

The Swiss bank said the job cuts are within its bond trading units as a result of a slowdown in earnings in the sector from the sub-prime mortgage crisis.

Over the last few months, at least 25,000 jobs have been trimmed in financial institutions globally as a result.

A spokesperson for Credit Suisse said the job cuts were as a result of ‘market conditions and projected staffing levels required to meet client needs‘. However, the bank added that ‘several hundred people‘ would be hired this year ‘in areas targeted for revenue growth‘ including emerging markets, commodities and derivatives.

For many years, banks worldwide made huge bets on the strength of the US housing market, as low interest rates enabled people on low incomes to get access to cheap mortgages.

However, huge increases in US interest rates meant these mortgage holders were hit hard causing record defaults and investments linked to this sector lost billions of dollars in value.

As a result, profits at Credit Suisse’s investment banking division were nearly wiped out with returns falling from $653 million to $5.1 million.

The bank was forced to write-down the value of investments related to residential and commercial mortgages and connected leveraged loans by almost $1.9 billion. However, compared to some of its rivals, this was a fairly modest sum.

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