Credit Suisse recently revamped its investment banking leadership in Asia. Are the Swiss bank's changes a sign that the region has cooled even further since a poor end to the year?
Zurich-based Credit Suisse kicked the head of its investment banking arm in Asia, Ali Naqvi, upstairs three weeks ago. Naqvi had only been in sole charge of the job since last summer, so the move was sudden and unexpected.
But since Naqvi remains with Credit Suisse in an executive role, the move didn't raise eyebrows at the time. The bank terms it a «strengthening of leadership.»
However, the subtext is clear: Naqvi (pictured above) was subtly edged aside in favor of Ken Pang, until now head of trading in Asia. The move may be Credit Suisse's bid to stanch a drop in business, according to the «Financial Times» (behind paywall).
CFO Warns on Asia
The Swiss bank's finance chief, David Mathers, told investors recently to expect the first quarter to continue where the torrid fourth quarter had left off. Then, the unit's trading revenue shrank to half on the year in fixed income, and dropped nearly 10 percent in equities. Is Credit Suisse frantically preparing for a more pronounced cooling from investment banking in Asia, until now a reliable money-spinner, and not simply a quarterly dip?
In December, the bank lowered its target for pre-tax profit from Asia by 500 million Swiss francs to 1.6 billion francs – the sharpest cut in a series of lowered targets.
«Asia Pacific remains a priority and core focus for the group, driven by the continued wealth creation and business growth in our ultra-high net worth individual and entrepreneur client base,» the bank said at the time.
Asia Linchpin
CEO Tidjane Thiam needs Asia, which has been a bright spot in earnings, firing all cylinders for his wide-ranging strategy overhaul of Credit Suisse, which the bank is 17 months into.
Its private bank in the region has been pulling in money and shows little signs of slowing, but needs to be working in lockstep with its investment bank to win more revenue off clients, a key tenet of Thiam's strategy.
Credit Suisse faces headwinds «as it transforms from less of a standalone franchise to more of an integrated platform with private banking,» Deutsche Bank analyst Kinner Lakhani told the «FT». The bank reports the first quarter, including Asia profits, on May 4.
