Scandal-hit Credit Suisse considers creating single private bank
ZURICH – Credit Suisse is considering centralising the management of its bankers to the world’s wealthy, replacing a regional structure, three sources said, as part of efforts to fast-track an overhaul after a series of scandals.
The Swiss bank and its board are looking to decide on a
fresh strategy as soon as October after meeting in the mountain town of Bad
Ragaz, two sources familiar with the thinking of senior executives said.
Re-imagining the most prized part of Credit Suisse
illustrates how deep this overhaul is likely to be, with executives discussing
folding the private banking business and other services managing money for the
world’s rich into one global division, the three sources told Reuters.
Targeting the client managers who deal with its wealthiest
clients, many of whom are worth tens of millions of dollars, would scrap a
regionalised structure introduced in 2015.
Such a change would reel local managers in Asia and internationally,
who have enjoyed considerable autonomy, under tight Swiss control as well as
making it easier to cut costs.
Credit Suisse declined to comment.
Its larger Swiss rival UBS adopted a unified global wealth
management structure by combining its businesses servicing American and
international clients into one global division in 2018, allowing it to trim
costs.
DEFENCE STRATEGY
Credit Suisse executives and board members convened recently
in Bad Ragaz, best known for its spas and thermal baths, for an annual strategy
meeting.
The executives are concerned that Switzerland’s
second-largest bank, which has been hit by two scandals this year, could face
break-up calls from investors, or that its shrinking stock-market value makes
it a foreign takeover target.
A domestic merger with UBS, something that has been
discussed in the past, is viewed as a more palatable option, three sources also
told Reuters last week.
Managers did not formally discuss mergers at Bad Ragaz, with
the possibility of a tie-up “the elephant in the room”, one source said after
the meeting.
Under the direction of its new chairman Antonio
Horta-Osorio, Credit Suisse is looking to overhaul operations and prime its
businesses to protect it from investor pressure.
By combining its wealth management businesses, Credit Suisse
would be able to streamline products, while also becoming more attractive to a
potential merger partner, one source said.
A global entity could also work better with the investment
bank, which provides financial services to entrepreneurs and ultra-wealthy
families, two of the sources said.
A combined unit may get new leadership, the sources said,
adding that Horta-Osorio was driving key decisions on the bank’s overhaul and
its management.
A merged wealth management unit could either combine the
Asia-Pacific and International Wealth Management divisions, or further fold in
the bank’s private banking business for ultra-wealthy customers in its home
market, which now sits in its Swiss division, one source said.
Credit Suisse lost more than $5 billion in the rush to
unwind trades by family office Archegos and faces legal action for helping
clients invest $10 billion in bonds issued by collapsed supply chain finance
firm Greensill Capital.
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