Credit Suisse Group AG, Switzerland’s second-biggest bank, plans to split its European wealth-management business into two units to focus on diverging trends in emerging and mature markets.
Starting Jan. 1, one unit will focus on western Europe and the other on eastern Europe, the Middle East and Africa, Hans-Ulrich Meister, chief executive officer of private banking, said today in a memo, the contents of which were confirmed by Marc Dosch, a spokesman for Zurich-based Credit Suisse.
“We are increasingly focusing our investments and resource allocations on fast-growing markets, most notably in our emerging markets business,” Meister said.
Meister, who took over as head of private banking in August, aims to boost pretax earnings at the division by 800 million Swiss francs ($872 million) by 2014 as profitability falls amid structural changes in the wealth-management industry, including new agreements Switzerland is making with countries fighting tax evasion. Tax accords with Germany and the U.K. may result in Swiss private banks losing about 47 billion francs of assets and 1.1 billion francs in annual revenue, Booz & Co. said in a study last week.
“We have clearly made substantial progress in focusing and aligning our western European businesses to successfully tackle the persistent challenges presented by the new reality of wealth management,” Meister said. “The relevant complexities have recently accelerated, requiring even more focus on these mature markets in order to maximize our ability to profitably grow these important businesses.”
Romeo Lacher, who was head of private banking operations since 2004, will take charge of the western European business, the memo said. Alois Baettig, who led the European wealth-management business since 2006, will be responsible for eastern Europe, Middle East and Africa, it said.
Credit Suisse is cutting 550 jobs and integrating its Clariden Leu private banking unit into the rest of wealth management to reduce costs by about 200 million francs. It also plans to expand the business with ultra-high-net-worth individuals and with clients who book assets in their countries of residence.
Credit Suisse’s annualized gross margin in wealth management, or the amount of revenue earned on assets under management, fell to 114 basis points in the third quarter from 131 basis points in 2009. A basis point is one-hundredth of a percentage point.
The bank in September agreed to pay 150 million euros ($202 million) to settle proceedings in Germany against employees investigated for allegedly helping German clients evade taxes.