A major shareholder spoke out in favor of partnering one or both of the Swiss bank's problem units – asset management and investment banking. Crosstown rival UBS is a prime candidate.
Zurich-based Credit Suisse's asset management could be merged into a joint entity with a competitor, such as UBS, major shareholder David Herro of Harris Associates told «Sonntagszeitung» (behind paywall, in German). «I see lots of possibilities, either with UBS or with another player,» said the U.S. fund manager, which holds more than five percent of the Swiss bank.
A long-standing investor of Credit Suisse, Herro unleashed a torrent of criticism on former Chairman Urs Rohner, who left the bank in shambles in April. António Horta Osório, his successor, is spearheading a cultural, risk, and strategic overhaul which thus far has led to high-profile management reinforcement, the exit of a problematic investment banking area, and an internal wealth merger.
European Champion?
Herro extended the partnership thinking to Credit Suisse's investment bank, which due to Archegos and a series of ill-advised loans to Mozambique incurred losses and hefty regulatory sanctions, respectively. Noting that Europe's capital markets are sub-scale to U.S. rivals, Herro argued for a bulk-up.
«Of the globally active investment banks, none are European. I could envisage a joint venture here,» Herro told the Swiss outlet. He argued for a product line-by-product line scan of Credit Suisse's investment bank to evaluate which are profitable over the cycle – viewed in years, not quarters.
Vulnerable To Attack
However, Herro put the kibosh on speculation of a merger involving the entirety of Credit Suisse – while conceding the bank is vulnerable due to its languishing share price. «Credit Suisse isn't lacking the necessary size, particularly in wealth management,» he said.
«However, I wouldn't accept an offer anywhere near the current share price. The stock should trade at 20 Swiss francs in two or three years, and not at 9 francs,» Herro told «Sonntagszeitung».
