Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Practice Management > Building Your Business

Credit Suisse Mulls Sale of U.S. Private Bank

Your article was successfully shared with the contacts you provided.

Suisse Group AG fell after a Swiss newspaper reported that Chief Executive Officer Tidjane Thiam may raise capital as he overhauls the business.

Thiam will present a strategy in October that includes plans to sell the U.S. private bank and scale back the lender’s prime brokerage and fixed-income businesses, Schweiz am Sonntag reported on Sunday. Those measures may be accompanied by a capital increase, the newspaper said, without identifying its sources. A spokesman at Credit Suisse in Zurich declined to comment.

The stock fell as much as 1.3 percent Monday and was trading 1.1 percent lower at 25.70 Swiss francs at 1:11 p.m. in Zurich. The shares have gained 5.4 percent this year.

Credit Suisse, Switzerland’s second-largest bank after UBS Group AG, is under pressure from some shareholders to shrink its investment bank more aggressively and allocate more resources to wealth management. The investment bank recorded an 18 percent decline in pretax profit in the second quarter from a year earlier.

Thiam, who joined in July from Prudential Plc, told staff in a memo on his first day on the job that he would be “ruthlessly selective” about where the bank allocates its resources. The prime brokerage business, which is part of the investment bank, provides services for clients such as hedge funds.

U.S. Unit

The U.S. wealth management business is worth between 400 million Swiss francs ($412 million) and 600 million francs, Morgan Stanley analysts led by Huw van Steenis said in a note Monday, reiterating their overweight rating on the Zurich-based bank. They estimate the unit has $115 billion in assets under management and about 370 advisors.

Steenis estimates the Swiss firm will shrink capital allocated to prime brokerage by around 25 percent and macro trading by half, alongside some other under-performing fixed-income units.

Credit Suisse is also facing tougher capital requirements. The Swiss government plans to introduce legislation before the end of the year that would raise leverage-ratio requirements, a measure of the bank’s ability to meet its financial obligations.

“We thought it likely the new CEO may wish to accelerate plans ahead of new Swiss rules,” the Morgan Stanley analysts said in the note.

Credit Suisse returned to profit in the second quarter after a loss a year earlier, when earnings were hit by a fine to settle its tax evasion case in the U.S.

Thiam also plans changes in senior management that could affect allies of former CEO Brady Dougan, including private banking co-head Robert Shafir and Chief Financial Officer David Mathers, according to the newspaper.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.