First, Credit Suisse’s Asia unit lost its structural autonomy. Now, the arms’ length distance to investment banking capabilities has also extended. Will the troubled Swiss lender remain «the bank for entrepreneurs» in the region?
After the first half of 2022, Credit Suisse’s global wealth head Francesco De Ferrari doubled down on the Swiss lender’s continued focus on the so-called «one bank» model – a business approach of serving the diverse needs of ultra-high net worth individuals by offering the whole group’s capabilities across private and investment banking.
At the time, his proclamation to remain committed to the approach was already bold, given the bank’s renewed focus on tighter risk management and reduced structural autonomy in Asia – the lone region in the whole global wealth business to record positive inflows this year.
Following the latest strategic restructuring, there are more questions about the future of Credit Suisse’s «one bank» model – a key proposition to stay true to its marketing tagline to be «the bank for entrepreneurs».
CS First Boston
One of the key structural changes in the latest strategy update was the creation of a separate firm to house the investment bank’s capital markets and advisory activities under the revived First Boston brand. According to the bank, it envisions a CS First Boston with a «preferred long-term partnership with the new Credit Suisse».
This will effectively extend the arms' length distance between the wealth unit and investment banking capabilities.
While it may continue to serve Credit Suisse as a preferred partner, CS First Boston may also adjust its willingness to take on certain deals deemed too risky to protect its market valuation, especially due to hints of a possible IPO as a future option. Chief executive Ulrich Koerner had said last week that an unnamed investment company had already committed to injecting $500 million into the new investment bank.
Still DNA?
Previously, Credit Suisse repeatedly insisted that its cross-divisional capabilities were a matter of «DNA» that would not easily dissipate even following a restructuring. But since then, the bank has suffered from the outflow of key talents that hold this DNA, including the exit of deputy wealth chief Jin Yee Young who eventually joined Deutsche Bank to lead its private banking business in Asia.
«If you think of the verticals as business divisions, we are not the largest in any of them but we are, from what I gather from talking to clients, really the best at playing in the space between the verticals. In [the UHNW segment], this is really about doing more of the same and continuing to evolve because competitors don’t sit still,» De Ferrari said during the 2022 Investor Deep Dive in late June.
«You do not improvise the stuff that’s on this page overnight. We started this journey in 2005 with something called 'one bank’. 17 years later, we continue to evolve this. This is something that is embedded in the DNA of Credit Suisse. It’s not something you can copy that quickly overnight.»
