Credit Suisse is seeking to lure clients who in recent months have pulled billions out of the bank, back with attractive interest rates.
Francesco de Ferrari is instructing the 1,800 relationship managers in Credit Suisse's wealth unit to offer clients attractive rates on notes and bonds in a campaign to help offset outflows of client money, according to a «Bloomberg» (behind paywall) story, citing people familiar.
According to the report, Credit Suisse is lowering the threshold on client balances that garner interest rates between 5 and 6 percent. On top of that, the bank is said to be offering notes with nearly a 7 percent rate for clients to park their cash with the bank for several months.
Pressure on de Ferrari
The Bloomberg story goes on to say that Ferrari is under «intense pressure» from Chairman Axel Lehmann to stanch the asset outflows and bring money back into Credit Suisse.
Lehmann is currently making the rounds at conferences and media appearances, ostensibly to counter negative news surrounding the bank. In an appearance on Swiss TV on Monday, and said that client outflows have mostly stabilized, as finews.com reported.
At an extraordinary general meeting on November 23, Credit Suisse announced a loss of billions for the fourth quarter and warned of outflows of almost 84 billion Swiss francs, as finews.com also reported.
Margin Calls
To be sure, such year-end strategies to increase managed assets are not unheard of as end-of-year window dressing. But for de Ferrari, there is also the issue of margin calls to consider as liquidity tightens.
According to «Bloomberg», some of the desks have faced lending restrictions to fund the leveraged investments of clients because of liquidity constraints. Until clients bring funds back into the bank, pay off existing loans or initiate new business, the teams are told they cannot write new loans.
An uncomfortable situation rises where bankers attempting to lure money back also have to bring up margin calls on outstanding loans in the face of declining asset values.
Swiss Unit
André Helfenstein, the CEO of its Swiss Business also made the rounds in an attempt to allay fears about money outflows in the Swiss unit in an interview with the «Sonntagszeitung» newspaper (paywall, in German) on Sunday.
«We lost a total of 1 percent of our asset base,» Helfenstein specified, adding that few Credit Suisse clients closed their accounts after the money was withdrawn.
Whether or not that is the case, investors will find out when Credit Suisse releases its fourth-quarter earnings along with its assets under management on February 9.
