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Credit Suisse splits investment banking

Separating the global investment bank might help Credit Suisse to protect its core private client base in Switzerland from any resurgence at UBS

Story highlights

  • Credit Suisse did not announce any big job cuts on Tuesday morning
  • The bank had already said it would deepen its cost cutting, adding SFr1bn in October to a savings target
  • Separating the global investment bank might help Credit Suisse to protect its core private client base in Switzerland

Credit Suisse will split off its investment bank outside Switzerland from its global private bank, wealth management and Swiss investment banking business to meet what it called "the new regulatory reality".

The action comes hot on the heels of the decision by its great local rival UBS to cut more than 10,000 jobs as it gets out of businesses that need a lot of capital behind them, especially the trading of bonds, and focuses more on its core wealth management business.

Separating the global investment bank might help Credit Suisse to protect its core private client base in Switzerland from any resurgence at UBS, if the move is seen to shield the local bank from the volatile business of international markets and corporate financing.

However, the move could make doing business in Asia more difficult because the prevalence of first-generation entrepreneurs in the region means that investment banking and private banking are much more interdependent than in Europe or the US.

Credit Suisse did not announce any big job cuts on Tuesday morning, but said four leading executives would head up its new divisions and it would say goodbye to Walter Berchtold, the veteran chairman of its private bank and two regional chief executives.

The bank had already said it would deepen its cost cutting, adding SFr1bn in October to a savings target that had grown by SFr1bn ($1bn) in July. It has already cut SFr2bn of costs since last year.

    Brady Dougan, chief executive, said on Tuesday that the streamlining of the bank into two main units would help further reduce costs.

    Urs Rohner, chairman, said the group had already moved to the new capital regime and substantially reduced its risk-weighted assets, balance sheet size and expenses. He added that the split would further diminish the complexity of the business.

    "The new structure will create one of the world's leading integrated wealth management businesses and one of the first global investment banks that is in alignment with the new regulatory reality," he said.

    Hans-Ulrich Meister will continue to head private banking in Switzerland, Europe and Asia, as well as all Swiss client businesses. Robert Shafir will head private banking and wealth management products in the Americas. The Swiss investment banking business will come under their combined units.

    Eric Varvel and Gael de Boissard will head the investment banking division. Eric Varvel will run equities and investment banking department, while being head of Asia; Gael de Boissard will run fixed income, lead Europe and will be appointed to the executive board.

    Shares in Credit Suisse were 2.3 per cent lower in early Zurich trading at SFr21.07.

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