Credit Suisse upbeat as overhaul reaches the halfway stage
Era of austerity may soon be over as the financial services giant starts work on a blueprint for 2018-20
Zurich — Credit Suisse Group has signalled that the era of cost-cutting and job cuts may soon be over, telling employees that the bank will emphasise businesses that generate higher returns in its next strategic plan.
Work on a blueprint for 2018-20 began in July after the bank moved up a strategy meeting between executives and directors to June from the usual time of late August, according to the memo seen by Bloomberg.
Credit Suisse is midway through a three-year overhaul, reorganising operations around wealth management and emerging markets. Capital generation was the thrust of CEO Tidjane Thiam’s strategy in 2016, when the bank cut thousands of jobs, slashed operating expenses and sold risky assets. Thiam said the bank was now better positioned to boost growth and its stock price in future.
"Looking beyond 2018, we agreed there would continue to be significant value creation opportunities available to a restructured Credit Suisse," Thiam wrote. "That would translate into a growing valuation of Credit Suisse as we continue to allocate more capital towards businesses that will generate higher returns and are more capital efficient."
Two share sales have raised more than Sf10bn ($10.4bn) combined, while job cuts and other belt-tightening measures have trimmed Sf1.9bn in fixed costs. The bank has pulled back in investment banking and continues to wind down its strategic resolution unit, which contains assets that no longer sync with its strategy.
Credit Suisse said that moves to boost the size and proportion of capital allocated to businesses attracting a higher market multiple will drive the bank’s valuation higher after 2018.
In his comments on first-quarter earnings, Thiam singled out four units as having the highest returns on risk-adjusted capital: its Swiss banking unit, its two international wealth management businesses and its advisory business.
"Credit Suisse is starting to recover and the business is doing better and better," said Urs Beck, an EFG fund manager.
"I would still like to see from a strategic point of view smaller investment banking operations."
The shares had fallen 0.6% to Sf14.54 in Zurich by 3.36pm on Monday.