Francesco De Ferrari has four priorities that will bring the major Swiss bank's wealth management business back on track. In an interview with finews.asia, he notes the possibility of making acquisitions and discusses the power of social media, and forecasts when the share price of Credit Suisse will potentially recover.
Francesco De Ferrari, in recent months many wealthy clients have either left Credit Suisse or withdrawn billions in assets. Are you having sleepless nights?
I did not have sleepless nights but last October was not easy for us. We learned a great deal about the power of social media. On the positive side, we had an unprecedented amount of contact with clients. In that period, I must have personally engaged with five to 10 clients a day.
What did you tell clients about the possibility Credit Suisse could become insolvent?
There are rational and emotional considerations in such situations. Using facts, we could take clients through the published numbers that show we have always had a very solid capital ratio. It was also helpful that the rating agencies confirmed this.
«That made many clients nervous»
It was harder on the emotional side. We had to deal with unfounded rumors on Twitter. That made many clients nervous and prompted them to act.
Another key element is that social media had little influence during the 2008 financial crisis. That is different today, particularly in countries where people believe more in social media than they do in other sources of information. That adds a further twist to the complexity of communication.
Have the large client outflows stopped in the meantime?
As publicly disclosed in November last year, outflows had reduced substantially from the elevated levels in early October. Overall, very few clients decided to close their accounts. Some decided to transfer some of their assets.
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I can understand that as an entrepreneur and prudent risk taker. Now we have been working a great deal with our clients by effectively helping them to navigate the current environment and making sure we continue to deliver good service. I’m very confident that the money will come back.
You worked for Credit Suisse for 18 years before you decide to leave in 2018. What made you go?
For one, there were differences in opinion with Credit Suisse’s leadership at the time. I also received a CEO job offer in Australia. It was something I couldn't turn down.
But your stint was not very successful.
I wouldn’t put it like that. I restructured the company but had no influence on certain processes and legacies that had an enormous impact on the group.
«The bank is like a large family to me»
What I can say is that the shares rose about 35 percent after the restructuring. For me, that meant the job was done.
That was enough reason to return to Credit Suisse?
The bank is like a large family to me. When Thomas Gottstein (former CEO) called, it did not take me long to decide.
Much has changed since then. The current CEO (Ulrich Koerner) and most of the bank’s leadership are new. You have been in your current role for roughly 12 months. What have you done to improve or change the global wealth management business?
I defined four priorities. First, we want to expand our business with very-high-net-worth clients (assets of $50 million and above), particularly in the emerging markets, where 60 percent of our business already is. To help with that, the investment bank needs to be restructured in a way that it keeps critical capabilities that are fundamental for our clients.
I see significant business potential with high-net-worth individuals (assets between $2 and $25 million). They will soon be able to take advantage of a more digitalized advisory process that we are currently rolling out in Switzerland. As a next step, we will introduce it in Asia.
All of that does not sound particularly innovative.
I disagree. We want to offer our worldwide investment expertise to a clientele in a world that is becoming increasingly de-globalized and where opportunities may become much harder to identify, particularly in private markets. We will see increasingly fragmented investment regions take the place of a global investment universe.
«The water might be choppy, but the direction is set»
Another priority is our business with external asset managers. We took the decision to manage this business globally given the increasing demand for independent advice. We will take advantage of that trend.
Last but not least, we want to take advantage of our IT platforms globally given our technology has been fragmented to date.
What makes you optimistic that you will be successful in doing this?
Any company transformation of this size is complicated. There are elements, for example, the market environment, which is hard to call, and that obviously impacts our business. My degree of confidence lies in the talented people we have and our capabilities to serve our clients. Ultimately, companies are like ships.
Once you start pointing them in the right direction, the ship moves in that direction. The water might be choppy, but the direction is set. For me, October 27 (the date the bank’s new strategy was presented) was critical in setting the ship on the right course.
How long do you give yourself until everything is back to normal?
We have a three-year plan whereby market conditions will also play a role. The bank stated that it expects to deliver sustainable and attractive returns to shareholders from 2025 onwards. That stands.
Significant cost savings and job cuts are planned. How do you manage that?
It’s never easy because like I said, one of the reasons I came back to Credit Suisse is because this feels like a family. And it makes it all the more difficult when you feel like a family.
«We look at every opportunity given there will be consolidation in the future»
The reality is that no business can run sustainably long term if it has higher costs than revenues. In wealth management, we started executing the reorganization in November and we are on track. With respect to people, as difficult as some of these choices are, we assist them in finding new opportunities.
Which division has the largest layoffs and cost cuts?
While we don’t provide the breakdown, the focus is clearly on resizing and reshaping the investment bank with the other divisions contributing to the cost target as well. Third-party cost management is another important aspect.
Credit Suisse is increasingly seen as a takeover target given its low market capitalization. But let’s turn that around for once instead. Would an acquisition be a possibility for the global wealth management business to help it gain more critical mass quickly?
I feel we have so much potential with our own organic initiatives and that is where my attention is going.
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Integrating large-scale acquisitions is something that is complicated. I have personally seen success with more focused transactions. When I was in Asia, we bought the HSBC business in Japan in 2012 and it was a very localized integration with our wealth management business.
«Switzerland still has a lot more to teach the rest of the world than the other way around»
Focused acquisitions are easier than large-scale ones. And that’s an option for Credit Suisse in wealth management in the future. We look at every opportunity given there will be consolidation in the future.
Does Switzerland need two major banks?
Absolutely. That drives competition. If you just had one, I would worry.
Why?
Switzerland is a very particular economy. Because it’s not a very big domestic market and it holds a disproportionate number of global companies. These companies need financial institutions that are global and can support them as they run their businesses.
You lived for more than ten years in Singapore. Do you miss Asia?
Well, I’m still responsible for Asia. I think the speed, dynamism, and positivity of Asia is important. It’s a mindset we need to bring back here because we’ve lost a little bit of that. And there’s no reason why we shouldn’t be just as optimistic here.
On the other hand, I think Switzerland still has a lot more to teach the rest of the world than the other way around. Trustworthiness, long-term investment views. The DNA of wealth management is really more Swiss than not.
Credit Suisse’s share price has not really recovered since the new strategy was announced. Why is that?
It is normal as we announced we would be raising capital in October and that dilutes the shares.
As you go through a heavy restructuring, the share price doesn’t move. It only moves when you do the heavy lifting and you are off the back end. Once you start seeing positive results and momentum, quarter after quarter, then the share price will move. It is obvious that Credit Suisse shares are undervalued today.
What are your leadership principles when you lead your team?
When I took on the job, I gave my team three objectives. The first was clients. We really have to be clear about what it is that we are doing and whether we are adding value for clients or not. If not, we have to question it.
Number two is working together. We ran the business in silos. It doesn’t work. We need to start connecting the dots globally.
«It is important that I’m out there on the front line»
The third is urgency. The world is not waiting for Credit Suisse. When I re-joined, the organization had been a bit in limbo and needed a little bit of an energy boost to get going.
You will be 54 this year. If you perform well over the next three years, won’t you be in an excellent position to take the CEO job?
That is not on my bucket list. What really drives me now is building the best possible wealth management business for our clients.
Do you live in Milan and commute to Zurich?
No, I live in Zurich. It is very close to the office because the days are long. For me, a short commute is more important than a low tax rate.
How do you motivate staff last year during such a difficult time?
On the Executive Board, we are aware that the past years have been challenging for everyone and there is still a lot to do. It’s important for me to guide our colleagues with honesty and authenticity through this transformation and to provide regular updates as to where we stand. . Ultimately, intense times also unify.
Anyone who wants to change something has to start with themselves. That is my motto and I want to set a good example. It is important that I’m out there on the front line.
Since 2022, Francesco De Ferrari has been the CEO of the wealth management business and CEO of the EMEA region (Europe, the Middle East, and Africa) at Credit Suisse. He is a dual Swiss-Italian citizen who studied economics at New York University (US), after which he graduated with an MBA from Insead in Fontainebleau, France. His career started at Deloitte and Nestlé, after which he joined McKinsey. Subsequently, he worked as an entrepreneur in Italy for a number of years before joining Credit Suisse in 2002. At the Swiss bank, he held a number of leadership roles in Italy and Asia. His last function was that of CEO of Southeast Asia and the frontier markets. In parallel, he was also the CEO of Asia Pacific private banking. In 2018, he moved to Australian financial services firm AMP, where he was appointed as CEO. He returned to Credit Suisse in 2022. De Ferrari is married and the father of five children.
