Amidst the turmoil currently surrounding Credit Suisse, Switzerland's second-biggest bank is planning to offer onshore wealth management services in China starting next year.
Media reports indicate that Credit Suisse could cut some 5,000 jobs in a year of transition, one place the bank is looking to expand in mainland China by launching wealth management services after it secures full ownership of its local securities operation there, according to a «Reuters» story Friday.
«In spite of all these rumors flying around that Credit Suisse is pulling back or pulling out of China, China is a long-term play for us,» said the head of the bank's Asia Pacific wealth management business Benjamin Cavalli, in an interview with the news outlet.
A Work in Progress
According to «Reuters», the venture was delayed due to several factors, including staff departures, but some senior executive roles have been filled with more to come. So far, Credit Suisse hired some 50 staff for the wealth business, including relationship managers, and investment consultants, among others, according to the report.
Credit Suisse upped its stake in the joint venture to 51 percent two years ago and is now looking to take full ownership and «the securities joint venture full acquisition will hopefully be a Q4 or Q1 event next year,» Cavalli said.
Long Term View
The wealth management market in China is about $4.2 trillion in a country where household wealth is growing faster than the economy. At a media conference earlier this week, Martin Hess, the head of economic policy at the Swiss Bankers Association said «Chinese are getting richer faster than Europeans.» Also, given economic developments in China, he is curious to see how assets develop further, Hess said.
For Cavalli, this means taking a long-term view in light of the huge potential for selling rich Chinese wealth management products. «We will never go into a new market where we feel we have to have a payback of three or four years and pull the trigger, this is unlike Credit Suisse,» he told Reuters.
Risk-Off
Wealthy clients have become «risk-off» in the face of the pummeling the markets are undergoing, and Cavalli doesn't see an imminent turnaround saying «we see very little light at the end of the tunnel to suggest that there could be a potential recovery or that sentiment turns positive soon». Even so, has been able to temper some of the volatility due to the bank's large footprint in Asia in addition to its offshore wealth centers in Singapore and Hong Kong, the latter two of which Cavalli knows well.
Cavalli moved to Hong Kong from Singapore this year to become the sole head of the Asia wealth unit of Credit Suisse.
