Credit Suisse reported higher operating expenses during the first quarter as the financial institution invested in software, shrunk its team and continued restructuring efforts amid its acquisition by UBS following a run on the Zurich-based bank in March.  

THE BIGGER PICTURE: The $607 billion bank saw a 16% year-over-year increase in total operating costs to $6.3 billion during Q1, associated with a $1.4 billion goodwill impairment charge — as UBS is set to acquire the bank, according to the bank’s earnings release. Restructuring costs of $336 million also contributed to the expenses.

Among restructuring expenses was a $73 million investment in internally developed software, according to the release. The bank has not previously disclosed such software investments in its quarterly earnings.  

As costs grew, the bank reduced its headcount by 6% YoY and 5% sequentially to 48,150, according to the release. The bank previously committed to a reduction of its team by 9,000 employees by 2025, Chief Financial Officer Dixit Joshi said during the bank’s Q4 2022 earnings.  

The bank did not disclose the areas where the headcount reduction took place. 

Credit Suisse did not immediately respond to Bank Automation News on details of the staff cuts and the degree to which they included technology staff. 

Read More: UBS ups tech spend 11% in Q1

NOTEWORTHY: Credit Suisse was hit with a run on deposits in March, leaving the bank with a need for a bailout, which the Swiss government eventually supplied. This event was similar to the bank run seen in Silicon Valley Bank’s collapse, which saw billions of dollars in withdrawals before the Federal Deposit Insurance Corp. suspended its operations and eventually arranged for its sale to First Citizens Bank in late March. 

FLASHBACK: The bank previously committed to a transformation and restructuring initiative last year, Chief Executive Ulrich Korner said during Credit Suisse’s Q4 2022 earnings call. “Our cost initiatives will not impact the investments in risk management and technology, including digitalization, as well as our targeted business growth,” he said in Q4. “To sum up, we are well advanced on our journey to deliver a new, simpler, more focused Credit Suisse built around client needs.”  

The initiative followed the bank’s 2020 launch of its digital banking platform CSX to improve customer experience and enhanced online offerings, according to Credit Suisse. 

FUTURE LOOK: Credit Suisse has forecasted its outlook for Q2, as the bank expects to “report a substantial loss,” according to the release. 

“The Group’s actual results will depend on a number of factors, including the performance of the Investment Bank and Wealth Management divisions … the continued exit of non-core positions; goodwill, software and other impairments,” the release said.  

UBS will report its Q1 2023 earnings tomorrow. 

Editor’s Note: All amounts in USD 

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