Scandal-hit Credit Suisse considers creating single private bank

Credit Suisse Group AG (CSGN.S) is considering centralising the management of its bankers to the world’s wealthy, reversing a regional structure put in place six years ago, as the scandal-plagued Swiss bank looks for ways to tighten controls and improve operations, three sources familiar with the matter said.

The bank’s wealth management business is split, residing in three separate divisions — the international business, Swiss business and a separate Asia-Pacific unit. Some executives felt that separation had not worked well and combining the businesses into one group would offer benefits, one of the sources said.

By doing so, Credit Suisse would reel in local managers in Asia and internationally, who have enjoyed considerable autonomy, putting them under tighter Swiss control as well as making it easier to cut costs, the sources said.

It would be able to streamline products, while also becoming more attractive to a potential merger partner, one of the sources said. A global entity could work better with the investment bank, two of the sources said.

Credit Suisse declined to comment.

The discussions within Credit Suisse, which have not been previously reported, come after the bank suffered scandals including its ties to collapsed supply chain finance company Greensill Capital and losses from family office Archegos, exposing weaknesses in its risk controls.

The crises hammered the bank’s share price, and sources previously said left some executives worried that the bank could be vulnerable to unwanted pressure from activist investors or hostile suitors to change strategy.

Antonio Horta-Osorio, the bank’s new chairman, kicked off a strategic review in May. Options under discussion include spinning off its local Swiss bank to prepare the rest of the business for a merger, pruning back investment banking or selling its asset management business, sources have said.

FRESH STRATEGY

The Swiss bank and its board are looking to decide on a fresh strategy as soon as October after an annual strategy meeting in the mountain town of Bad Ragaz, best known for its spas and thermal baths, two sources familiar with the thinking of senior executives said.

Re-imagining the wealth division, seen by analysts and investors as the most prized part of Credit Suisse, illustrates how deep this overhaul is likely to be.

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 of the sources said.

A combined unit may get new leadership, the sources said, adding that Horta-Osorio was driving key decisions.

The model would follow a strategy taken by UBS Group AG (UBSG.S), which 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.

One of the options that Credit Suisse executives have discussed in the past is a merger with UBS, sources have previously said.

In Bad Ragaz, executives did not formally discuss mergers, but the possibility of a tie-up was “the elephant in the room”, one source said after the meeting.