The Swiss bank is due to unveil its turnaround plan on Oct. 27, a deadline employees say is too far off given the circumstances.
For Credit Suisse (CS) – Get Credit Suisse Group American Depositary Shares Report employees, the past few days have been hard.
How do you keep calm when all around you people are speculating that your company could fail?
The Swiss bank’s difficulties have brought back the dark memories of the 2008 financial crisis. The wildest speculation goes so far as to present the Swiss firm as the possible Lehman Brothers of 2022.
The collapse of Lehman in September 2008 triggered the worst crisis since the Great Depression. It required a huge bailout from the federal government to avert a collapse of the global financial system.
Credit Suisse has faced the consequences of several financial missteps, including a $5.1 billion loss from a client, Archegos Capital Management, in 2021.
But for the employees interviewed for this story, the situation at the bank is concerning but not anything close to what occurred at Lehman.
It’s a ‘Wait and See’ Situation
“It’s wait and see,” an employee who manages a team of at least 200 people in New York told TheStreet on Oct. 3. The employee requested anonymity to speak with TheStreet because tough decisions are currently underway and the employee does not know whether their future within the bank is guaranteed.
At Credit Suisse’s New York headquarters on Madison Avenue in the Flatiron District, people are putting their heads down and working. Some employees have told TheStreet that they are concerned and stressed for their jobs but also worried that the market is perceiving the bank as high-risk.
The cost of insuring the financial behemoth’s bonds against default rose at least 15% last week, to levels that have not occurred since 2009 in the aftermath of the financial crisis, also known as the Great Recession.
‘It’s a Confidence Issue’
“It’s a confidence issue,” said an employee who required anonymity. This employee said they’re preparing their team for the prospect that while the team will probably survive the situation, some of its positions are likely to be cut.
While employees don’t expect Credit Suisse to go under, they do see the bank’s historic prominence as a thing of the past. They expect drastic budget cuts and, in certain division, sharp job cuts. Some staffers in investment banking didn’t know if they’d still be there a month from now.
On Sept. 26, Credit Suisse indicated that its turnaround plan will include asset disposals. Internally, that was understood as the possibility that the sale of the entire investment banking division was an option on the table. Once one of the jewels of Credit Suisse, this division has been hit by a number of scandals.
The bank said it was “well on track with its comprehensive strategic review, including potential divestitures and asset sales.”
This statement has prompted a number of talented veteran staff to leave, employees say.
“We definitely have seen a lot of people leaving,” said an employee. “These people [have] been in the bank for decades, and now they’re leaving, and senior managers as well. There’s a level of uncertainty that drives people who [are] very loyal to the brand to actually leave because of their concern about finding themselves without a job.”
Aware of the internal anxiety, Chief Executive Ulrich Körner tried to reassure the teams in a memo on Sept. 30: “I am conscious that there is lots of uncertainty and speculation both outside and within the company.”
Turnaround Plan: Too Long a Wait
“We are in the process of reshaping Credit Suisse for a long-term, sustainable future — with significant potential for value creation,” Körner added. “I am confident we have what it takes to succeed.”
That message only increased the internal guessing game, TheStreet has learned. “Everybody’s at this point speculating highly,” an employee said.
Not helping the situation is that some employees who are working on the turnaround plan have signed nondisclosure agreements, which prohibit them from giving heads-ups to their colleagues who will be affected.
A number of employees say that waiting three weeks for the restructuring plan is untenable.
“Three weeks in this environment is long,” said an employee. “Hopefully they could expedite some of the announcements.”
Market pressure also could push Credit Suisse to accelerate its schedule. Credit Suisse shares are down 53% since January.