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Credit Suisse Weighs Overhaul of Wealth Management Business

The bank could consider appointing a global wealth management head to oversee the unified business.

(Bloomberg) -- Credit Suisse Group AG is weighing an overhaul of its key wealth management business, consolidating several private banking units to save costs and centralize control as the firm seeks to move past recent scandals.

The move would scrap a structure that hands power to regional chiefs, particularly in Asia, according to people familiar with the matter. The bank could consider appointing a global wealth management head to oversee the unified business, one of the people said.

Thomas Gottstein, incoming chief executive officer of Credit Suisse Group AG, arrives for a news conference to present the company's full-year earnings during a news conference to present the company's full-year earnings in Zurich, Switzerland, on Thursday, Feb. 13, 2020. Tidjane Thiam’s final results as Chief Executive Officer of Credit Suisse validated his shift to wealth management while again demonstrating the volatility of the investment bank and trading businesses.

A Credit Suisse spokesman declined to comment.

New Chairman Antonio Horta-Osorio has pledged a review of the bank’s business after the Swiss firm was shaken by the dual Archegos Capital Management and Greensill Capital scandals. Even before those incidents, Chief Executive Officer Thomas Gottstein had been reducing duplication and simplify the bank’s structure. He combined the investment bank and markets division in one of his first overhauls, folding some Asian markets activity into that unit.

Combining the separate wealth management businesses under global leadership would mirror UBS Group AG, its biggest rival. There, wealth management is led by co-heads Iqbal Khan and Tom Naratil.

Read More: Credit Suisse Chief Takes Window of Opportunity for Revamp (1)

The move would roll back a structure set up by former chief executive officer Tidjane Thiam more than five years ago and may trim expenses as well as present a more unified approach to clients. The lender currently splits private banking across three divisions catering to Switzerland, Asia and Europe, Emerging Europe and Latin America.

Helman Sitohang in Asia, Philipp Wehle and Andre Helfenstein currently share responsibility for the wealth management operations, which have gained importance at the expense of the investment bank. Horta-Osorio told bankers at a recent meeting in London that the firm has a great wealth management business “with ancillary services,” according to several people who heard the remarks.

Under Thiam, the bank had followed in the footsteps of larger peer UBS in focusing more on the steady growing income from providing services to the world’s wealthy, pivoting away from the volatile earnings of trading and dealmaking.

Chairman’s Review

Credit Suisse is in one of its most difficult periods since the great financial crisis, rocked by the dual blow-ups this year which imposed multi-billion dollar losses and further dented its reputation. Horta-Osorio said the crises went beyond any he’d lived through over three-and-a-half decades in the industry.

Read more: Credit Suisse Raises $2 Billion as CEO Cuts Hedge Fund Unit (1)

While the Chairman surveys options, dozens of key rainmakers have already voted with their feet, departing for Wall Street rivals after the Archegos hit ravaged stock-based pay. That’s pushed Credit Suisse to offer retention bonuses to some standout managing directors and other senior staff in an attempt to stem the departures, people familiar with the matter said earlier this month.

Reuters reported earlier that the bank is considering folding private banking and other services into one global division.

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