The Swiss unit of Credit Suisse has to find another 400 million Swiss francs to reach its profit target this. Thomas Gottstein knows what needs to be done.

The pressure is on: Thomas Gottstein, the head of the Swiss division of Credit Suisse (CS), has delivered what his CEO demanded from him, profits on a sustainable level. Based on the performance of the Swiss Universal Bank, he is one of the few units within the group to be asked to return the profit for 2018 that was set as a target in the three-year-plan.

The target was a pretax of 2.3 billion Swiss francs, and cost savings, including a reduction of the 17,000-strong workforce by 1,600.

Speed Up

After a rather modest set of figures reported for the first nine months of 2017, the Swiss unit now has to accelerate its performance. It needs to add another 400 million francs to its profit to reach the target set by Tidjane Thiam, which means that Gottstein will have to up the pace of the restructuring measures.

The banker told «Finanz und Wirtschaft» (in German, behind paywall), how he will achieve the feat:

  • Accelerate growth: revenue will have to increase as much as 4 percent compared with 2016 to reach the target. He sees a lot of potential in the mortgage business to grow faster than the average, having had to forego volume due to regulatory reasons in the past years. The problem: CS Switzerland aspires for return on equity of 15 percent – undercutting the competition won’t be possible under those parameters. Instead, the bank will simply have to «work hard», as Gottstein put it.
  • Job cuts: Swiss Universal Bank will have to cut another 6 percent of its operating costs compared with 2016. Cuts that will affect staff first and foremost. Gottstein will eliminate another 300 jobs this year to reach his goal of 1,600. The effect of the cuts however will only be felt fully after a time lag due to the severance pay rules of the bank.
  • Reduction of the branch network: CS Switzerland already pared the number of branches to 135 from 150. He told the newspaper that a further adjustment to customer demands was in the offing – i.e. closures.
  • Spending cuts: The Swiss unit had to buy some external know-how last year to implement banking regulation. SUB will spend less money on consultants and services providers in 2018.

In short, Gottstein will be called to accelerate the work of the past years in coming quarters to reach his goal and satisfy investors and CEO Thiam. The bank on February 14, 2018, will report full-year results.