Credit Suisse has revealed sweeping plans to slash 9,000 jobs and to raise billions of pounds from investors, including from the Saudi National Bank, as part of a company-wide overhaul meant to draw a line under a series of scandals and help it recover from a fresh £3.5bn loss.
The announcement follows months of speculation over the scale of change set to take place under its new boss Ulrich Körner, who has been tasked with scaling back the investment bank and slashing more than 2.5bn Swiss francs ($2.1bn) in costs.
The overhaul comes as Credit Suisse tries to draw a line under a string of scandals, primarily involving its investment bank. The bank also revealed on Thursday that it had racked up a 4bn Swiss franc loss (£3.5bn) in the third quarter, signalling further financial woes.
The Swiss banking group, which is the country’s second largest bank, said on Thursday that it was already in the process of slashing 2,700 full-time staff, accounting for roughly third of its planned cuts, and a fifth of its 52,000 global employees.
It expects the total staff base to shrink to 43,000 by the end of 2025, through a mix of further job cuts and natural attrition, meaning it will not replace staff when they leave the bank. The lender did not confirm how many of its 5,500 UK staff might be affected by the cuts.
“This is a historic moment for Credit Suisse,” Körner said. “We are radically restructuring the investment bank to help create a new bank that is simpler, more stable and with a more focused business model built around client needs.”
While Big Oil is doing well, Big Tech is struggling.
More than $65bn has been wiped off the market value of Facebook and Instagram’s owner, Meta, after it reported profits had halved during the third quarter of the year as advertisers rein in spending amid the global economic downturn.
The 19% tumble in Meta’s share price during after-hours trading knocked a further $10bn off the personal wealth of the company’s chief executive, Mark Zuckerberg, who founded Facebook while he was at university.
Zuckerberg, who is Meta’s largest shareholder and who has most of his fortune in the company’s shares, had already seen his net worth plummet by at least $70bn by September this year.
Meta, which owns Facebook and WhatsApp, reported $27.7bn in revenue for the third quarter – higher than analysts’ forecasts – as sales shrank by 4% compared with the same period a year earlier.
It came as the company, which has poured investment into its virtual reality project, the metaverse, warned of weaker trading ahead.
Amid growing competition from TikTok, Meta is also suffering as companies cut back on advertising spending.
The London estate agents Foxtons has flagged a “less certain” sales market, as it reported a 25% rise in third-quarter revenues.
Revenue in the three months to 30 September 2022 rose to £43.8m, while revenue for the first nine months of the year climbed 11% to £109m. Despite “the ongoing macroeconomic and political uncertainty,” Foxtons expects to deliver full-year results ahead of its previous expectations.
Guy Gittins, the new chief executive, said:
I’m delighted to be back at Foxtons and to have met with so many of the talented team since my arrival in September. The business has significant unfulfilled potential and there is a shared understanding and vision of how we can deliver this. I am excited about leading this reset and determined we can get Foxtons back on the front foot.
This quarter has seen continued positive momentum with growth across all areas of the business. Our lettings business performed strongly as we delivered both organic and acquisitive growth. Our investment in sales negotiators, combined with strong buyer demand and a renewed focus on sales intensity has benefitted our sales business.
We enter Q4 with a less certain sales market backdrop, but cost action taken in H1 and our resilient lettings and financial services businesses leave us positioned to weather further macroeconomic and political challenges.
Gittins, who stepped down as Chestertons’ CEO earlier this year, has returned to Foxtons where he worked between 2002 to 2006, rising through the ranks from junior negotiator to sales manager at its south Kensington office.
The Liberal Democrats said the lack of a proper windfall tax was an insult to families struggling to pay bills. The party’s leader Ed Davey said:
The Conservative government’s refusal to properly tax these eye-watering profits is an insult to families struggling to pay their energy bills.
Even the CEO of Shell has admitted that oil and gas companies should be taxed more to help protect vulnerable households.
It’s time Rishi Sunak introduced a proper windfall tax and used the extra money to support people facing heart-breaking choices this winter.
Innocent families and pensioners should not be left to pick up the bill for this Conservative government wrecking the economy.
More reaction to Shell’s £8.1bn profits, made in just three months.
The TUC’s general secretary Frances O’Grady said:
These profits are obscene – especially at a time when millions are struggling with soaring bills.
The government has run out of excuses. It must impose a higher windfall tax on oil and gas companies.
The likes of Shell are treating families like cash machines.
Today is another reminder of why need to bring our energy sector back into public ownership.
Households across Britain are being fleeced.
Unilever has reported better-than-expected quarterly sales after raising its prices at a record pace, by 12.5%.
The consumer giant, which makes Dove soap, Magnum and Ben & Jerry’s ice-cream and Knorr stock cubes, recorded 10.6% underlying sales growth to €15.8bn in the July to September quarter, which was better than the 8% forecast by analysts. It now expects underlying sales growth for the full year to be above 8%. Ice-cream sales sales were strong, and deodorants returned to volume growth.
However, the sales growth was achieved by raising prices, as overall volumes fell by 1.6% in the quarter. Unilever warned of “more negative underlying volume growth” in the final three months of the year.
Chief executive Alan Jope said:
The global macroeconomic outlook remains mixed, and we expect the challenges of high inflation to persist in 2023. The delivery of consistent growth remains our first priority.
Unilever has had a tumultuous year after its failed bid for the consumer health division of GSK at the start of the year, and with activist investor Nelson Peltz joining its board. Jope has announced he will stand down as CEO at the end of 2023.
Chris Beckett, head of equity research at Quilter Cheviot, said:
The long process to replace the CEO continues to hang over the business, which also faces increased pressures on volumes from the cost-of-living crisis as well as currency devaluation increasing the cost of raw materials and feeding into cost pressures next year.
While the decline in sales volumes in Q3 was better than Q2, the business saw absolute falls in Europe and the US as people switch to cheaper products. Growth therefore is mainly driven by price increases and the simple fact is that investors do not value pricing as highly as volume growth. Management expects margin improvement in 2023/24, however the market will take some convincing. Unilever’s margins have been squeezed as the war in Ukraine has pushed up energy costs and the cost of ingredients, and Unilever has not demonstrated the ability to consistently grow both sales and margins in recent years.
While ice-cream sales remain good, it is these types of products that more people may choose to forgo next year. However, in the long-term, Unilever’s stable of brands are likely to remain in demand and therefore we do not view the valuation as expensive.
Rival Reckitt Benckiser, the company behind Dettol cleaning products and Durex condoms, said yesterday that it had raised prices by nearly 10% in the third quarter, as sales volumes declined by 4.6%. Consumer companies’ energy and raw material costs have surged this year following Russia’s invasion of Ukraine, and they are seeking to pass higher costs on to consumers.
Reckitt warned of pressure on consumers globally. Its finance chief Jeff Carr told journalists:
Consumers across the globe are under pressure. Certainly, looking at the outlook, I’m concerned about European consumers over the winter.
Global carbon emissions from energy will peak in 2025 thanks to massively increased government spending on clean fuels in response to Russia’s invasion of Ukraine, according to analysis by the world’s leading energy organisation.
The International Energy Agency (IEA) said that government spending on clean energy in response to the crisis would mark a “historic turning point” in the transition away from fossil fuels, in its annual report on global energy.
The invasion of Ukraine has prompted an energy crisis around the world, with global gas prices initially surging. The crisis has caused steep inflation that has made households poorer around the world.
Governments have been scrambling to find other sources of energy. Some analysts have questioned whether fears over energy security could lead to the use of fossil fuels for longer, slowing the world’s race to net zero carbon emissions. Some countries – including the US and the UK under previous prime minister Liz Truss – have pledged to encourage fossil fuel extraction to try to ease prices.
However, Fatih Birol, the IEA’s executive director and one of the world’s most influential energy economists, said the energy crisis caused by Russia’s invasion “is in fact going to accelerate the clean energy transition”.
The IEA said planned investments in green energy in response to the crisis meant that – for the first time – government policies would lead to demand for polluting fossil fuels peaking this decade. The agency cited notable contributions from the US Inflation Reduction Act, the EU’s emissions reduction package, and actions by Japan, South Korea, China and India.
Victoria Scholar, head of investment at the trading platform interactive investor, has looked at the moves in markets this morning:
European markets have opened mostly lower with the FTSE 100 outperforming. Shell is at the top of the UK index thanks to upbeat third quarter earnings, while BP is also rallying in its slipstream. Meanwhile Unilever is in positive territory thanks to its latest results.
Focus turns to the European Central Bank’s rate decision at lunchtime which is expected to announce the second 75 basis point hike in a row as it looks to get to grips with inflation in the eurozone. In the US, investors will be looking for further signs of an economic slowdown stateside with the release of its latest GDP growth figures.
In terms of notable earnings, Credit Suisse has opened down by more than 7% after reporting a major third quarter loss of 4 billion Swiss francs and announcing a strategic overhaul.
Last night, shares in [Facebook owner] Meta plunged almost 20% after-hours on the back of rising costs and the slowest sales growth since its IPO in 2012. Third quarter net income slid by 52%, falling short of analysts’ expectations, while its bet on the metaverse faced scrutiny given its lack of success so far.
Labour has called for a “proper windfall tax” on energy companies. Ed Miliband, Labour’s shadow climate change and net zero secretary, said:
As millions of families struggle with their energy bills, the fact that Shell recorded the second highest quarterly profits in the company’s history is further proof that we need a proper windfall tax to make the energy companies pay their fair share.
Labour has led the way in calling for a windfall tax on energy companies making bumper profits in this crisis, to help fund our energy price freeze.
Rishi Sunak’s existing plans are a pale imitation of Labour’s windfall tax, and would see billions of pounds of taxpayer money go back into the pockets of oil and gas giants through ludicrous tax breaks.
It tells you everything you need to know about whose side this Conservative government is on that they refuse to back Labour’s proper windfall tax whilst working people, families, and pensioners suffer.
Rachel Reeves, shadow chancellor, tweeted:
Michael Hewson, chief market analyst at CMC Markets UK, said about Shell’s $4bn share buyback:
While this move is likely to please shareholders it is likely to bring down the red mist elsewhere when it comes to what Shell is doing with its excess cash. $18.5bn in share buybacks so far year to date and a 15% rise in dividends indicates where management priorities lie, however as an exercise in PR is likely to invite a firestorm of criticism from the usual suspects, even as Shell’s effective tax rate on UK profits sits at 65%.
As in previous quarters the bulk of its profits have come from its upstream business and integrated gas business, although the gas business suffered on the back of a disappointing performance in its trading unit, with profits seeing a decline of 38% from the numbers we saw in Q2.