ZURICH, Switzerland (AP) – Credit Suisse Group said problems in the mortgage market will linger as long as 18 months as it announced layoffs in its commercial mortgage-backed securities division Wednesday, mostly in New York.
Credit Suisse Group said Wednesday it will lay off 170 more employees as a result of market turmoil caused by the U.S. subprime mortgage crisis.
The reductions in the investment banking unit will be on top of the 150 layoffs announced last week in New York and London, said spokesman Marc Dosch. Dosch said the cuts were in line with the reduction in client demand.
Credit Suisse had said Monday that its investment banking and asset management results had been adversely affected “by recent market events,” but it still expected to report a third-quarter profit of at least $860 million (1 billion Swiss francs).
Chief Executive Brady Dougan said Wednesday the global market for mortgage credit will remain problematic for the next six to 18 months, but that the bank could still take advantage of trading opportunities.
Subprime mortgages are loans given to customers with poor credit. Banks and investors have shied away from originating and purchasing subprime mortgages because of increasing defaults in the risky loans.
Credit Suisse does not write mortgages, but it has been a leading player in packaging home loans into securities.
Its shares rose 1.86 percent to 82.15 Swiss francs ($70.09) in Zurich.