Credit Suisse Group AG (CSGN) is deploying investment bankers to woo African entrepreneurs as the second-biggest Swiss bank tries to build its wealth-management business on the continent.
Those bankers offer services from capital raising to trade finance and mergers and acquisitions advice, John Wright, a managing director and market leader for Africa at Credit Suisse, said in an interview in Cape Town.
“We have a dedicated group of investment bankers embedded within private banking,” said Zurich-based Wright. “They have the mission to ensure that private bank services that normally would only be offered to platinum-level clients with fee income of $5 million and above are brought to these entrepreneurs.”
Credit Suisse is vying with UBS AG (UBSN) and other Swiss banks for the emerging-market millionaires as a global crackdown on tax evasion forces European and American clients to withdraw funds. While Credit Suisse is withdrawing from Angola, the Democratic Republic of Congo and smaller African markets to cut costs, South Africa and a number of other nations match the bank’s criteria for scale and risk, said Wright.
“It’s the usual suspects, the countries where we have critical mass,” said Wright, who declined to name them. “There are a handful of countries that tick both boxes, and South Africa is at the top of the list.”
Should Credit Suisse’s 40-strong Africa team, based in London, Zurich and Geneva, grow its 5 percent market share and build a profitable and compliant business in South Africa, that may eventually justify an onshore presence, said Wright, who spends one-and-a-half to two weeks a month in Johannesburg and Cape Town.
The number of Africans with at least $1 million of investable assets climbed 9.9 percent to 140,000 in 2012, according to a report published in June by Cap Gemini SA (CAP) and Royal Bank of Canada. Nigerian millionaires will increase by almost 47 percent to 23,000 over the next four years as higher house and stock prices complement a booming economy, Johannesburg-based New World Wealth said in March 4 report.
UBS tops London-based Scorpio Partnership’s 2012 ranking of wealth managers with double the $855 billion of assets of fifth-placed Credit Suisse. Wright declined to disclose the assets that the Zurich-based bank manages for African clients.
Credit Suisse, which is scaling back its securities division at a slower pace than UBS, is ending relationships with offshore private banking clients from 83 countries with total assets under management of about 3 billion Swiss francs ($3.4 billion), Chief Financial Officer David Mathers said in October. The bank didn’t disclose specific countries, which have an average of 40 million francs to 45 million francs of assets.
“From a good business perspective, it’s important to be here on the ground,” but the compliance and control costs are prohibitive, said Wright, after meeting Credit Suisse clients at the five-star One&Only hotel on Cape Town’s waterfront. “It would be my aspiration to do that in South Africa, but you’ve got some way to go to demonstrate that the business does meet the minimum critical mass to support that.”
Credit Suisse, the largest of 14 Swiss banks under criminal investigation by the U.S. Department of Justice, helped 22,000 Americans hide as much as $10 billion from the Internal Revenue Service, according to a report by the Senate Permanent Subcommittee on Investigations. Chief Executive Officer Brady Dougan apologized in testimony to the subcommittee on Feb. 26, saying a small group of Swiss-based bankers appear to have broken U.S. law and fooled top managers.
That issue wasn’t raised by clients and executives in Johannesburg and Cape Town, said Wright.
“What you’re talking about is an historic legacy and actually our clients are really more interested in what we can do for them,” he said.
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