The bank was able to release provisions for loan losses.
(Photo: Reuters)
Zurich The major Swiss bank Credit Suisse is restructuring its business and, after the series of scandals, presented long-term financial targets for the first time in the spring. Following the example of its local rival UBS, the bank wants to combine its previously regionally organized asset management into a central unit, as the company announced on Thursday.
The newly formed Global Wealth Management is to manage 1.1 trillion Swiss francs (one trillion euros) by 2024 – that would be an increase of 200 billion francs within three years. The bank’s most important business area is expected to generate an additional billion francs in income.
In addition, the institute wants to withdraw from ten markets that are viewed as non-core markets. Credit Suisse has not yet disclosed which regions it will hit. For the time being, the bank did not disclose any personal details either.
Global Wealth Management is to receive a 25 percent higher share of the allocated equity and thus be able to grow. Credit Suisse also plans to hire 500 client advisors over the next few years to expand its business with the rich and wealthy. The capital is to be withdrawn from the investment bank.
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Regional units on the Swiss home market and in Asia will also be added to the investment bank. The bank wants to get out of the so-called prime brokerage, the trading business with hedge funds. The area was responsible for the five billion Swiss francs loss in the collapse of the Archegos hedge fund.
Credit Suisse is sticking to asset management
Like UBS, Credit Suisse wants to adopt a capital-conserving strategy in investment banking, with a focus on advising on mergers and acquisitions. However, the bank does not want to give up leadership positions in risky bond products. To this end, the portfolio of complex financial derivatives, which ties up a lot of capital, is to be reduced.
The bank is also sticking to the business of managing the funds of professional clients, namely asset management. In the past few weeks, there has been repeated speculation about a sale of the division – interested parties are ready, you can hear in the market.
The bank has now rejected this for the time being. Instead, the asset management should be more closely linked with the asset management, an area from which the division was separated only a few months ago.
Asset Management is currently still dealing with the Greensill Crisis. Together with the bankrupt fintech Greensill, the bank had operated four supply chain finance funds that it had to freeze and wind down in early March. The bank’s professional clients are worried for more than $ 2 billion.
The bank’s new head of the board of directors has worked out the strategy adjustment over the past few months.
(Photo: Reuters)
António Horta-Osório, Chairman of the Board of Directors of Credit Suisse, said: “The measures announced today form the framework for a significantly stronger, more customer-oriented bank with leading business areas and regional offerings.” The scandals should be a thing of the past. “Risk management, which shapes all of our actions and is always of paramount importance, will help promote a corporate culture,” he promised.
Horta-Osório had worked out the strategy since taking office in April. However, the Chairman of the Board of Directors is afraid of a new start at the head of the bank: Thomas Gottstein will remain Head of Credit Suisse even under the new strategy. Gottstein said, “We are becoming a more efficient bank with likely less volatility in earnings and a greater focus on the markets in which we operate.”
The core business of Credit Suisse is growing despite all the crises: As the bank also announced on Thursday, it took in around 5.4 billion francs in the third quarter, around four percent more than in the previous year. The pre-tax profit rose by 26 percent to around one billion Swiss francs. The bottom line, however, was only CHF 434 million in net profit, a decrease of 21 percent compared to the same period in the previous year.
More: Shadowing scandal: Financial regulators certify Credit Suisse “serious violations of supervisory law”