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Breakingviews: Credit Suisse’s big squeeze

Thursday, October 25, 2012 - 03:36

Oct. 25 - Credit Suisse’s announcement of further cost cutting shows how business conditions have deteriorated, but it is hard to keep cutting costs without cutting revenue say Breakingviews.

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Top of the breaking news agenda today you don't speed banks Credit Suisse keeps on cutting costs by how much more -- -- -- to screens. I'm sometimes there are also sees good results on blames profit dropped on property policies. With me now to discuss these stories as voters picking views economics and it's up and what how to ask and -- -- let's have a Credit -- particular set of results profits hot. An opponent. Cut costs by one billion more -- is not enough. Well the -- results. Report it when you take this and that out and so forth by today's rather mediocre standards for investment banks it's not too bad -- really think their underlying return and equities 10% which is below their target of fifteen. But is still reasonably. For today. The next billion well they were were had the pack with the three billion. Cost an announcement last year. And it's a little bit distressing and a sense to hear that that wasn't enough it just shows how the business conditions have deteriorated. I'm last year -- must be fixed income this year it's going to be the next round is gonna be equity. Will it be enough well it's very hard to keep cutting costs but also cutting revenue say this looks like it's going to be squeezed industry for quite some time. And that I mean on top that one billion and cost savings that would being told to date there's. That you speculation that more jobs are going to go in last week it was up to 2000 -- yeah against things question is that enough. Well I mean the one billion -- costs will be largely. Consist of job cuts -- over as yet that the pay level it Credit Suisse hasn't seemed to fallen as much as one might have expected. Will it be enough. Well you just gotta shrink to fit the business is down on the capital requirements are -- which means that traits that used to be profitable are no longer quite as profitable. And they're gonna just have to keep on climbing until they get to a point the industries gonna have to keep on coming into its two point where profitability makes sense. I'm that means which cuts and it means headcount cuts and of course you know I'm OK some -- of -- it's difficult conditions but I cannot consume going through it. Yeah unfortunately equity market levels are going through equity trading business isn't very good. And that means that that the people that are in the intermediaries these investment banks are having problems. OK sometimes. Probably if anything good results today from something that we've washed -- profits went down by two phones. What would your advice be to the boards and from the well they've just got to keep doing what they're doing you know they they need to you get their Spanish losses behind them they're in a pretty good position to do so. So these losses are this this decline in profits these charges are part of it is is that course getting to be the bank they want to be which is a world class bank. Crystal clearly -- is Kuwait but there on the cart path. But despite its economy and -- the housing market has not reached. Both missile Amin was better than anywhere else for something then Spanish companies probably pretty close the bottom -- probably taken most of their losses. And the key thing for something their courses that they moved out of Spain is their main market many years ago it's less than 20% of profits although a lot more of percentage of the -- the problems that the bank faces when you think this is -- as I was against and I suspect this will be pretty much as bad as it gets a little cold it's okay. I -- but that was ever had asked for much of picking -- From what I have more financial insight into what cigarettes picking you -- every day felt that the east and seventeenth at two -- or something. I'm -- give it this is Reuters.

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Breakingviews: Credit Suisse’s big squeeze

Thursday, October 25, 2012 - 03:36