Credit Suisse said on Tuesday its private banking arm would swallow its smaller asset management unit to cut costs and announced a management shake-up that raises the profile of those jockeying to succeed its beleaguered chief executive.
The Zurich-based bank also reinforced its commitment to fixed income business, after local rival UBS all but abandoned it, by promoting debt banker Gael de Boissard, who will co-run its investment bank from Nov. 30 and join Credit Suisse's top management team from next year.
De Boissard will run fixed income and head Europe, the Middle East and Asia. Current investment banking chief Eric Varvel will run equities and the investment banking department, which includes corporate finance, as well as becoming chief executive of Asia-Pacific, the bank said.
At the private banking unit, which looks after the financial affairs of wealthy clients, current head Hans-Ulrich Meister will be joined by asset management head Robert Shafir, who is credited with making his former unit more profitable, though it is still dwarfed by the private bank and investment bank units.
“This streamlined structure will produce further synergies and help reduce expenses across the bank,” Credit Suisse Chief Executive Brady Dougan said in a statement.
It also showcases top executives in the running to take over from Dougan, according to sources familiar with the matter.
“The two names mentioned most often (to succeed Dougan) are Meister and Shafir. They don't get along, so if one jumps ahead, then the other one is likely to leave,” one of the sources told Reuters last week.
The 53-year-old Dougan came under pressure in June when Credit Suisse was taken to task by Switzerland's central bank for holding insufficient capital.
The bank has since said it would boost capital by 15.3 billion francs by issuing convertible bonds, cutting more costs and selling real estate.
Credit Suisse didn't comment on the future of or potential successors to Dougan, an American investment banker who has been in charge since 2007 and has said he has no plans to step down.
“The changes announced today are a stepping-up of our strategy. They will ... further reduce complexity across the bank for the benefit of all our clients and stakeholders,” Credit Suisse chairman Urs Rohner said in a statement.
Bank Sarasin said the measures fall short when compared with UBS, which said three weeks ago it would exit many fixed-income activities in the face of tough capital rules that make it harder to turn a profit from trading.
“Today's news looks a little bit like trying to do something to react on competitor's news from UBS two weeks ago without having much to say,” said Sarasin analyst Rainer Skierka. He rates Credit Suisse at neutral.
Credit Suisse prides itself on avoiding the government bailout that UBS took in 2008, but it has been accused of squandering its savvy handling of the financial crisis.
At 12:00 SA time, Credit Suisse shares were 2.2 percent lower at 21.09 francs, underperforming the broader European banking sector index, which was down 0.8 percent.
Credit Suisse said Shafir would take responsibility for all private banking and asset management operations in the Americas. Meister will run private banking in Switzerland, Europe the Middle East, Africa, and Asia, plus all Swiss client businesses.
Meister and Shafir will jointly run securities trading in Switzerland for corporate and private banking clients, which will be moved from the investment to the private bank.
Meister and Shafir will also oversee Solution Partners, a team of former investment bankers who provide tailor-made products to the wealthiest clients, typically those with more than $50 million in assets. The unit was set up in 2005 when Credit Suisse launched its “one-bank” strategy to develop cooperation between its investment and private banks.
Top executives Osama Abbasi and Fawzi Kyriakos-Saad, who run Asia Pacific and EMEA, respectively, will both leave Credit Suisse, the bank said, adding that private banking chairman Walter Berchtold would also depart.
The personnel changes and reorganisation come three weeks after Credit Suisse said it would cut an extra 1 billion Swiss francs ($1.1 billion) of costs as part of efforts to bolster capital and profits.
The bank said nearly two weeks ago it would merge its retail and private banking arms in Switzerland from January, cutting 300 jobs at the Swiss bank to save 50 million Swiss francs.
Reuters reported in September that Credit Suisse was preparing to dismantle its sub-scale asset management unit in a bid to cut costs. - Reuters