Credit Suisse to focus on wealth unit after year of scandals
The bank, based in Zurich, is exiting most of its prime services business
Credit Suisse has said it would shrink its investment bank and shift more resources to the wealth management unit, as part of a restructuring intended to draw a line under a tumultuous year in which it was rocked by the Archegos Capital Management and Greensill scandals.
The bank, based in Zurich, is exiting most of its prime services business after the implosion of Bill Hwang’s family office and shifting about $3bn of capital from the investment bank to wealth management, according to a statement on Thursday. The bank is also reorganising into four divisions and said that it will create a single wealth management unit, as reported earlier this week by Bloomberg.
Chair Antonio Horta-Osorio has spent the past six months conducting a root-and-branch review of Credit Suisse after disastrous risk lapses wiped out billions in profit, plunged the bank into crisis and led to an overhaul of top management. By shrinking the investment bank and shifting more resources to wealth management, he’s seeking to move away from more risky activities in favor of more stable returns.
“Risk management will be at the core of our actions, helping to foster a culture that reinforces the importance of accountability and responsibility,” Horta-Osorio said in the statement.
The bank updated several targets and created several new ones. The bank is targeting a return on tangible equity — a key metric of profitability — of greater than 10% by 2024, compared with an earlier medium target of 10% to 12%. It’s aiming to distribute 25% of profit in 2022, after suspending its share buyback earlier in 2021.
Since taking over in April, Horta-Osorio has focused on rebuilding the ranks of the risk division, after failures led to the departure of former risk and compliance head Lara Warner. Recent hires include David Wildermuth from Goldman Sachs as chief risk officer and Rafael Lopez Lorenzo as chief compliance officer. He’s also tapped former UBS Group executive Axel Lehmann to head the board of directors’ risk committee and former chief risk officer at Lloyd’s Banking Group Juan Colombas, for a seat on the board. Colombas previously served under Horta-Osorio as chief risk officer at Lloyds from 2011 to 2020.
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