Credit Suisse Said to Weigh Sale of Part of German Bank
The bank may focus on ultra-rich clients and sell the remainder to boost the profitability of the German business, said two of the people, who asked not to be identified because the deliberations are private. A decision hasn’t been made and a sale may not happen, the people said. An official for Credit Suisse in Zurich declined to comment.
Credit Suisse is seeking to “enhance efficiency” in western Europe to help the bank save about 750 million Swiss francs ($796 million) annually at the private banking and wealth management division by the end of 2015, Chief Executive Officer Brady Dougan told investors this week. Swiss and emerging-market clients account for about 70 percent of the private bank’s assets under management, Dougan said.
The company, based in Zurich, is examining various measures to cut costs and raise profit across different countries in western Europe, two of the people said.
Credit Suisse said in 2011 it would seek to increase profit at its private bank by 800 million francs by 2014 as sluggish client activity squeezed margins. The company integrated its Clariden Leu wealth management unit with the rest of the division and merged consumer and private-banking units in Switzerland to cut expenses. Last year, the bank said it would also combine private banking with asset management.
“The integration of Clariden Leu is expected to yield cost savings of 125 million francs from 2014, while streamlined Swiss regional coverage will add 50 million francs,” Citigroup Inc. analyst Kinner Lakhani wrote in a May 31 note after a meeting with Rolf Boegli, who heads Credit Suisse’s business with premium clients and external asset managers in Switzerland.
Additional cost measures include a “comprehensive portfolio review with actions being taken where markets do not contribute towards targets,” Lakhani wrote.
Credit Suisse has already taken steps to improve profit in Germany. The bank informed staff in December that it would shut three of 12 private-banking locations in the country and cut 150 of about 500 jobs. Profitability considerations are unrelated to the investigations by German authorities of clients with undeclared offshore accounts, one person said.
The company agreed in March to sell British wealth manager JO Hambro Investment Management Ltd. for 50 million pounds ($77 million). That same month Credit Suisse bought Morgan Stanley’s wealth-management operation in the U.K., Italy and Dubai to expand its business with ultra-high net worth clients -- typically those with at least $50 million to invest -- which it called “a key priority.”
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