* Credit Suisse Q3 net 454 mln Sfr vs 705 mln Sfr poll avg
* Investment bank revenue slides nearly 20 pct, pretaxprofit halves
* Restructures interest rate trading business
* Says stowed Q3 funds for return to cash dividend in '13
* Private bank, wealth mgmt posts 8.1 bln Sfr net new money
* Ups cost-cutting target by 100 mln Sfr to 4.5 bln Sfr
* Preparing more detailed data on American clients for U.S.probe
By Katharina Bart
ZURICH, Oct 24 (Reuters) - Credit Suisse willshrink interest rate trading after revenue and profit at itsinvestment bank slid in the third quarter, it said on Thursday,further scaling back an area squeezed by strict new regulationand a drop in activity.
Rivals UBS, Deutsche Bank and Barclays are all restructuring their investment banks - lesslucrative in volatile post-crisis markets and under fire fromregulators insisting banks swap risk for more capital - and someanalysts said Chief Executive Brady Dougan had not gone farenough compared to his peers.
After announcing that investment banking income slid nearlya fifth, Credit Suisse said it would ramp down the ratesbusiness with the aim of lowering risky assets by $7 billion andleverage by $60 billion. The bank, which added 500 staff at itsinvestment bank in the third quarter, said this would result injob cuts but gave no further details.
Credit Suisse's investment bank, already suffering a generalslump, was also hit by a fall in fixed income trading in thethird quarter when clients steered clear of those products untilthe U.S. Federal Reserve clarified its intentions regarding itsbond buying programme.
While Credit Suisse is not alone in suffering from this -American banks including Goldman Sachs have said they tootussled difficult fixed income markets -analysts suggested the Swiss bank had been slow to limit itsexposure.
At Credit Suisse, fixed income and bond trading made for 29percent of overall revenue last year, compared with 22 percentbefore the financial crisis of 2008-09. By contrast UBS said ayear ago it planned to cut 10,000 investment bank staff bywithdrawing from large parts of fixed income and would focusalmost exclusively on private banking.
Meanwhile, Barclays is cutting 1,800 staff and Deutsche istrimming 1,500 jobs at their investment banking arms.
Credit Suisse said it would cut spending by at least another100 million francs to more than 4.5 billion by the end of 2015. Analysts expect it to slash its repo book and push derivativestrading onto exchanges as opposed to over-the-counter, but manywere underwhelmed: Deutsche Bank called Thursday's announcement"a small evolutionary step" and JPMorgan said Credit Suisseneeded to make deeper investment banking cuts.
JPMorgan analyst Kian Abouhossein noted the bank will stillbe left with a 50-50 mix of investment banking capital andprivate banking business - and an investment bank almost doublethat of UBS in terms of risk-weighted assets.
"We would have liked and expect in the long-term furtherinvestment banking restructuring within the Tier II fixedincome, currencies and commodities franchise," Abouhossein said.
SHARES FALL
Investors also voiced their disproval. By 1321 GMT, thestock was down 2.9 percent at 29 francs, against 0.7 percentrise across European banks overall
Credit Suisse's overall net profit rose to 454 million Swissfrancs ($509.1 million) from the year-ago period - when chargeslinked to its own debt ate into profits - well short of analystestimates, which averaged 705 million francs. Revenue dipped little more than 1 percent.
CEO Dougan told analysts Credit Suisse still plans to pay a2013 dividend and stowed funds in the most recent quarter to doso. He did not specify a payout ratio. The bank paid a largelystock dividend of 0.75 francs in 2012, and flagged a return tocash when it met key capital ratios, which it has now achieved.
Credit Suisse private bank's net new money stood at 8.1billion francs amid inflows from lucrative asset managementproducts as well as ultra-wealthy and emerging market clients.
However the unit faces headwinds: Credit Suisse is amongroughly a dozen Swiss banks under investigation by U.S.prosecutors for helping wealthy Americans evade tax and isnegotiating to settle the allegations.
A July deal brokered by the Swiss government paved the wayfor Credit Suisse and others to hand over information on whereclients closing their accounts moved their money.
Since then, Credit Suisse has delivered "substantial,high-level" data on clients leaving, and is preparing to providemore specific data, financial head David Mathers said onThursday.
More banking results follow Credit Suisse this week:Deutsche Bank and UBS both report the quarter on Tuesday andBritish bank Barclays reports on Wednesday.
Barclays (BARC)
