Credit Suisse's Largest Investor Increased Its Stake, Herro Says

  • Swiss bank headed in right direction with overhaul, Herro says
  • Harris Associates was bank's biggest shareholder at end 2015

David Herro.

Photographer: Chris Goodney/Bloomberg

Credit Suisse Group AG investor Harris Associates LP has taken advantage of a plunge in the Swiss bank’s shares to increase its stake, Chief Investment Officer David Herro said.

“We have used price weakness -- we usually do -- to increase our holdings,” Herro said in an interview with Francine Lacqua and Michael McKee on Bloomberg Radio on Monday. “There has been some friction but they’re headed in the right direction.”

Chief Executive Officer Tidjane Thiam in March announced deeper cuts to the investment bank, just five months after unveiling an overhaul designed to shrink riskier businesses and focus on wealth management. With the Swiss lender projecting further writedowns tied to illiquid positions and volatile markets eroding trading revenue in the first quarter, the shares have dropped about 32 percent this year, hitting the lowest in almost three decades in February.

David Herro

Photographer: Chris Goodney/Bloomberg

Under Thiam’s second restructuring plan, the bank is seeking to cut risk-weighted assets at the securities business by another 20 percent to about $60 billion this year. Credit Suisse also announced 2,000 additional job cuts at the unit, bringing the total headcount reduction across the bank to 6,000 in 2016.

“When you have these changes it’s not often pretty,” Herro said. They’re “allocating capital to places where you can get the best through-the-cycle return” such as wealth management in Asia.

Harris Associates was Credit Suisse’s largest shareholder at the end of last year, according to the bank’s annual report. Herro said in February that the Chicago-based company owned “just over” 8.5 percent of Switzerland’s second-largest bank.

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