Asia comes out on top in Credit Suisse strategy change
Credit Suisse will invest in its APAC business across wealth management and investment banking as part of a strategy overhaul.
At its much-anticipated investor day in London, Credit Suisse said it will dismantle its stand-alone Asia-Pacific operation and roll its regional private banking and wealth management and investment banking businesses into two global units –wealth management and investment banking.
In the next three years, the bank will re-allocate $3bn of capital from the investment bank to wealth management which will enjoy significant investment. APAC has been earmarked as a growth market over the next three years in both investment banking and wealth.
As a result, the investment bank will no longer “all things to all clients” but will pick its spots and regions where it will compete. Within the investment bank, it will invest in its ‘capital-lite’ business, and that capital markets and mergers and acquisitions (M&A)
The new strategy is all about better serving the needs of its core wealth management and private banking clients and APAC is central to this.
Credit Suisse is closing almost all of its prime services division following losses related to the collapse of Archegos with the exception of its Index Access business and its APAC Delta One trading operation, which is led by Shivam Gupta.
Christian Meissner, CEO of the Investment said that both Delta One and Index Access are crucial to his plan to grow bank’s equity derivatives business in the region and “enable access to Asia markets for key franchise clients. “
The bank is planning to launch a new global credit merchant banking business, and has earmarked APAC for expansion of its existing securitised product (SP) business. “SP will expand its reach into APAC as part of our growing focus on these markets,” said Meissner.
Expansion in China is a big priority, with Meissner looking to recruit in advisory, equity capital markets and equities trading. Helman Sitohang, CEO of APAC, added that the bank will continue to expand across Greater China. The bank has boosted headcount by 15% in the last three years across investment banking and wealth management, and has hired 70 private bankers so far this year.
Credit Suisse acquired majority control of joint venture in China earlier this year and Sitohang said the bank will expand its full-service offering in both IBCM and wealth management on the mainland.
Perhaps the one area of uncertainty – and potential tension – relates to the new structure. Under previous CEO Tidjane Thiam, APAC was run as a bank within a bank, whereas now it will exist to serve the global needs of its clients.
Credit Suisse will retain a regional matrix structure – so there will be CEOs in APAC, Europe, the Middle East and Africa and and North America but their remit will change and they will be responsible for covering clients and boosting global collaboration rather than focussing entirely on their own regions.
“Our clients are global the sectors we cover are global so our teams must also be global. We are excited about re-combining the banking busines sin Asia and Switzerland with the banking team in the IB,” said Meissner, adding that regionally-focused bankers had less visibility previously.
As Meissner unveils his new global management team in the weeks ahead, it be interesting to see where the new balance of power will lie. It's clear, though, that APAC – and China in particular, are a big part of the bank's future.