Credit Suisse Resets With a Retreat From Wall Street

The result will be a leaner bank with around 9,000 fewer staff in three years, with a first wave of cuts involving 2,700 people being let go now. Credit Suisse stock fell about 18%, suffering its steepest one-day percentage decline in

FactSet

data going back to 1985, as investors digested the plan and the dilution to their shareholdings.

The Swiss bank said Thursday it would sharpen the focus of its markets trading businesses and rebrand its capital markets and advisory business as an independent unit called CS First Boston, reviving a storied U.S. investment-banking brand.

Michael Klein,

a veteran banker and board member who helped plan Credit Suisse’s latest pivot, will step down to become the new unit’s chief executive. Credit Suisse CEO

Ulrich Körner

said the unit could be spun off to other investors.

Credit Suisse intends to become “simpler, more stable and with a more focused business model built around client needs,” Mr. Körner said in a statement.

The bank confirmed it is poised to transfer its securitized products group—a large business within the investment bank—to a consortium made up of

Apollo Global Management

and Pacific Investment Management Co. The Wall Street Journal reported that sale was nearing on Wednesday.

Credit Suisse said the moves are aimed at channeling more of its assets and other resources into managing money for the world’s rich, which will continue to be its main business. It said its cost base should fall by around $2.5 billion from current levels to around $14.7 billion by 2025.

Around $1.5 billion of the new shares will be bought by Saudi National Bank, Credit Suisse said, giving the Saudi bank up to a 9.9% shareholding. A rights issue for existing shareholders will run through November.

Saudi National Bank said it may also invest in CS First Boston. Mr. Körner, the chief executive, said the unit has a $500 million funding commitment from a prominent investor, which he didn’t name, despite a spinoff potentially being years away.

The Saudi bank is owned mainly by Saudi Arabia’s sovereign-wealth fund, the Public Investment Fund, and another government fund. It had been looking to acquire a foreign bank to boost its status, a person familiar with the entity said.

Qatar, a regional rival to Saudi Arabia, is among Credit Suisse’s large existing shareholders, with a roughly 6% stake in the bank. Qatar’s sovereign fund started investing in European banks after being established in 2005 to help invest Qatar’s revenue surpluses and diversify its economy from energy.

Credit Suisse estimated the cost of the restructuring at around $2.9 billion over the next two years.

The Swiss bank is reinventing itself after a client collapse last year cost it more than $5 billion and a series of reputational scandals pushed up its legal bills. Revenue dried up in some key financing and trading businesses this year and, in July, a new chairman and executive team said drastic change was needed.

Credit Suisse reeled after a client, family office Archegos Capital Management, defaulted in March 2021, triggering a $5 billion-plus loss. The bank was already trying to simplify its business and the effort picked up speed.

Then, earlier this month, a social-media frenzy sparked a sharp fall in Credit Suisse’s share price, leading to some customers pulling deposits and investments from the bank. Credit Suisse on Thursday said the outflows were significantly higher than normal and have yet to reverse.

Between January and Sept. 30, net asset outflows were nearly $13 billion, compared with net inflows of around $30 billion in the same 2021 period.

Still, some other markers of market unease have waned. The cost of insuring the bank’s debt against default, as measured by credit-default swaps, fell to 2.32 percentage points Thursday, S&P Global Market Intelligence data showed, down from a peak of 3.75 percentage points earlier this month. That price means it costs 232 euros a year to insure 10,000 euros of the bank’s debt against default.

Bringing back the First Boston name marks a new chapter for Credit Suisse in its U.S. ambitions.

The bank first joined with First Boston in 1978 and took a controlling stake around a decade later. It retired the name in 2006 to have a single brand, but the name still has cachet with former employees and clients. The original First Boston was founded in 1932 as the investment arm of the First National Bank of Boston.

The strategy changes came alongside Credit Suisse’s fourth consecutive quarterly loss. It posted a net loss of around $4 billion for the third quarter, largely because it had to impair the value of deferred tax assets to reflect the strategic plans.

Write to Margot Patrick at margot.patrick@wsj.com