FirstFT: Credit Suisse weighs splitting up investment bank

Good morning. Credit Suisse has drawn up plans to split its investment bank in three and resurrect a “bad bank” holding pen for risky assets, as the Swiss lender attempts to emerge from three years of scandals.

Under proposals put to the group’s board, Credit Suisse hopes to sell profitable units such as its securitised products business in a bid to stave off a damaging capital raise, according to people familiar with the plans.

Chair Axel Lehmann installed Ulrich Körner as chief executive in July with a brief to carry out a radical shake-up of the bank, which has been hit by a corporate spying scandal, investment fund closures, a record trading loss and a litany of lawsuits in recent years.

The latest proposals would see the investment bank divided into three parts: the advisory business, which could be spun off later; a “bad bank” to hold high-risk assets that will be wound down; and the rest of the business.

The board and executive team are planning to unveil the strategy — which is expected to include thousands of job cuts — with the bank’s third-quarter results on October 27.

Thanks for reading FirstFT Europe/Africa. Here is the rest of today’s news — Jennifer

Five more stories in the news

1. Vladimir Putin mobilises reserves for Ukraine war Russia’s president yesterday ordered the mobilisation of army reservists to support his ailing campaign in Ukraine and warned that he would use the country’s nuclear arsenal if its “territorial integrity” was “threatened”. Western officials, however, shrugged off the nuclear “bluff”.

• Go deeper: Putin’s “partial mobilisation” is a gamble that underscores his shrinking room for manoeuvre at home and is unlikely to pay off, experts said.

Thank you to everyone who took part in yesterday’s poll. Eighty-three per cent of respondents said Russia should be forced to pay reparations for its war in Ukraine, while 12 per cent said it should not.

2. Jay Powell refuses to rule out US recession The Federal Reserve chair’s downbeat commentary came after the central bank lifted its benchmark interest rate 0.75 percentage points for a third consecutive time, to a target range of 3 per cent to 3.25 per cent, and signalled it would maintain tight monetary policy to fight soaring inflation.

“We have got to get inflation behind us. I wish there were a painless way to do that” — Jay Powell

• Market reaction: US stocks tumbled, with the S&P 500’s losses for the year reaching 20.5 per cent, while the yield on the two-year Treasury note hovered near a 15-year high.

• Opinion: The surge in US borrowing costs is having spillover effects for the rest of the world, brewing a global backlash against the Fed, writes Claire Jones.

3. Liz Truss seeks NI protocol settlement The UK prime minister wants to resolve the post-Brexit row over Northern Ireland before the 25th anniversary of the Good Friday peace deal next Easter. Truss sought to calm tensions over the issue during a 75-minute meeting with US president Joe Biden in New York yesterday.

4. Somerset Capital for sale The boutique fund manager, which was co-founded by business secretary Jacob Rees-Mogg and manages about $5bn, is exploring a sale as chief executive Dominic Johnson prepares to step down ahead of a potential move into politics.

5. Seven dead in Iranian protests over hijab At least seven people have been killed in protests across Iran, officials said, after thousands took to the streets in recent days in anger at the death of a young woman arrested for allegedly failing to observe the Islamic dress code.

• Opinion: The tragic death of a 22-year-old arrested by morality police has emboldened those seeking freedom, writes Najmeh Bozorgmehr.

The day ahead

BoE rate decision Traders are betting that the Bank of England’s Monetary Policy Committee will act more aggressively than it did in August, when it raised interest rates 0.5 percentage points to 1.75 per cent.

• Elsewhere: Switzerland’s central bank is expected to raise its benchmark rate by as much as a percentage point from minus 0.25 per cent, leaving Japan alone at sub-zero levels.

NHS performance plan Patients can expect to be offered a GP appointment within two weeks, with the most urgent seen the same day, under a plan to boost England’s cash-strapped healthcare system to be unveiled by Thérèse Coffey, health and social care secretary.

Economic indicators The European Commission releases flash September consumer confidence data, after declining to an 18-month low the month before. The European Central Bank publishes its latest economic bulletin, while the US labour department has weekly jobless claims, which have declined for five weeks. (FT, WSJ)

UN Security Council meets Diplomats are preparing for a confrontation when the US and western powers denounce Russia over its invasion of Ukraine at the gathering, which Moscow’s foreign minister Sergei Lavrov is expected to attend.

Nasa’s asteroid protection mission The US space agency holds a media briefing on the world’s first test of technology for defending Earth against asteroid or comet hazards. It is due to hit its target asteroid, which poses no threat, on Monday.

FT Business Book of the Year The shortlist is out for the year’s most compelling and enjoyable insight into modern business, with £30,000 awarded to the winner and £10,000 to each runner-up. Check out the longlist here.

What else we’re reading

What a far-right Italy means for Europe Polls suggest Sunday’s general election will result in a far-right government led by Giorgia Meloni of the comparatively inexperienced Brothers of Italy. While the rightwing coalition’s leaders may be fierce Eurosceptics, Rome and Brussels need a functional relationship.

UK’s yawning current account deficit With a growing gap between consumption and production, the pound can only maintain value if foreigners want to lend to Britain or buy up assets such as land, housing or companies. But what happens if confidence drops?

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Bitcoin can’t be separated from crypto Why do the “bitcoin maximalists” claim bitcoin is not a cryptocurrency? One can see why they might be keen to distance themselves from cryptoland scams. But their arguments don’t stand up, writes Jemima Kelly.

Britain’s ‘Big Four’ supermarkets have an Aldi problem It was supposed to be different this time, with Tesco, Sainsbury, Asda and Morrisons having learnt the lessons of the financial crisis. This downturn, it’s meant to be all about keen pricing, not profits. But discount rivals Aldi and Lidl are ascending rapidly, writes Cat Rutter Pooley.

Irish youth look overseas The country’s history of emigration has seen an estimated 10mn people leave since 1800. While in the past, many were forced out by famine and economic crises, young people now are drawn to jobs abroad or the freedom of living in more open societies.

Food & drink

Lobster thermidor, Michelin star chefs and recipes that come with non-disclosure agreements: take a look inside the test kitchens of the world’s most experimental airlines.