As of January 2022, Credit Suisse’s Asia Pacific business will no longer be a standalone unit following organizational restructuring at the bank. Without the full autonomy to make local decisions, what will this mean for cross-divisional collaboration in the region?

With the creation of a unified, global private and investment bank, Credit Suisse will shed its Asia Pacific unit next year after a strategy review led to a broader reorganization with a focus on «strengthening, simplifying and investing for growth».

«Structure follows strategy,» said chief executive Thomas Gottstein during a media call yesterday, underlining Credit Suisse’s new focus on being a «Swiss bank with strong regional empowerment».

«In essence, our new structure is intended to strengthen collaboration, bringing the divisions together to invest and go.»

More Decision-Makers, Greater Distance

Under the existing structure that will last till the end of 2021, Asia Pacific is a standalone unit that houses its own wealth management and investment banking divisions.

This setup enabled years of swift, local decision-making on cross-divisional business in the region – often called «one bank» deals – which have created a fair share of success as well as setbacks, most notably the accounting scandal involving China’s Luckin Coffee whose founder was once called a «poster child» for the bank by ex-CEO Tidjane Thiam.

But under the new structure, cross-divisional business decisions will effectively involve two additional divisional heads – the global private and investment banking chiefs – who will be based outside of Asia in Zurich. 

More Collaboration = More Business?

While Credit Suisse repeatedly highlighted a continued focus on its integrated model with more connectivity and collaboration, this may not necessarily translate to more cross-divisional business with the nature of the connectivity less focused purely on the top line and more on accountability.

Even compensation at the bank will highlight this factor, using economic profit – which accounts for the cost of capital and risk – as part of the calculation for payouts. 

«The regional overlay is really here to ensure that you have proximity to clients and ensure that people collaborate in the various regions across wealth management, investment banking as well as asset management,» said Gottstein, underlining a shift in culture towards greater risk management. «That’s why most of our peers are also organized like that – it’s very important that you have to have clear responsibilities.»

Investing for Growth

Although it remains to be seen if the new structure will result in greater simplicity and a stronger business in Asia, Credit Suisse is indeed investing for growth. 

It plans to make a 25 percent increase by 2024 in allocated capital to wealth management, which will heavily depend on the region’s booming riches.

And of the approximately 500 relationship managers it plans to hire over the next three years, the majority will be for the APAC business, sources familiar with the matter told finews.asia.

Old Culture

Another factor that could offset the increased organizational layering and relocation of decision-making away from Asia is the existing culture.

While Credit Suisse is embarking on a cultural shift in areas like risk management and accountability, some believe that the entrepreneurial legacy built by bankers from within the APAC unit will not be lost nor discouraged. 

«The bank previously shifted its equities business into global markets business with no slippage in client connectivity or execution,» the aforementioned source said, adding that this will likely be mirrored in the current reorganization. «Once you’ve developed this kind of muscle memory, there is no need to give it up.»