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With contributions from Ambereen Choudhury, Cathy Chan, and Jan-Henrik Foerster.
27 August 2022, 2:27 A.M. PDT
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This article discusses CSGN CREDIT SUISS-REG 5.12CHF -0.12%
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Credit Suisse Group AG is rethinking its long-term goals for its company in mainland China as part of a larger strategic overhaul. This is because the company has lost billions of dollars in recent years.
According to sources acquainted with the situation, the new chief executive officer, Ulrich Koerner, and the Asia-Pacific head, Edwin Low, are among the senior bankers scheduled to meet in Singapore next week to discuss, among other things, their views on the China business. According to sources who requested anonymity because the discussions are private, senior executives at Credit Suisse have expressed misgivings about the merits of extending its existing securities business and wealth management in the nation.
More: Credit Suisse Prepares for Rough Investment Bank Split
Any diminution of Credit Suisse’s aspirations in the world’s second-largest economy would represent a remarkable reversal, two years after it was granted permission to assume control of its local business as part of Beijing’s much-vaunted openness to foreign financial firms. The fact that key employees left its securities business is a sign of the company’s bigger problems, and it has caused regulators to delay giving the company permission to grow its equity trading and wealth products.
Even after recruiting new employees and investing extensively, senior executives want to explore whether they should downsize their operations in China, according to sources familiar with the matter. One of the people stated that Asia managers are arguing to executives in Zurich that China is still a viable investment destination. The discussions are taking place in the context of the company’s second company-wide strategy review in as many years, which will be released alongside third-quarter earnings. Following a spate of losses, the bank intends to also reduce its investment bank.
Credit Suisse Is Questioning China’s Aspirations in Strategy Redesign
Ulrich Koerner
A Credit Suisse representative stated that Asia-Pacific is a significant growth market for Credit Suisse, and we are dedicated to investing in the area. This includes China, where we continue to pursue our long-term goals. As previously indicated, as part of our plan, we continue to invest in our China footprint, including our immediate priority of acquiring full control of our securities joint venture. We will provide an update on the status of our thorough strategic review when we report profits for the third quarter, but any speculation on potential conclusions before that is entirely speculative. ”
Before it can launch its proposed new business in China, China’s securities regulator has instructed the bank to address the excessive personnel turnover. In recent months, Credit Suisse lost over half of the top human management at its China securities ventures, including the chief financial officer, chief compliance officer, and chief information officer.
More: China Regulator Warns Credit Suisse to Halt Exodus of Executives
Prior to November, the bank’s strategy review featured a significant “pivot to APAC,” signifying the aim to pursue rich clients in mainland China, Hong Kong, and Singapore. Aspirants to the top tier of global wealth managers have no choice but to concentrate their efforts on Asia, where the market for serving newly-minted billionaires is still relatively young. Credit Suisse has big plans for the mainland, including building a local bank that would give it the branch network it needs to run its wealth management business.
Global banks are reconsidering their chances in China due to a surge of regulatory tightening, growing tensions with the United States, and the impact of a tough COVID-Zero policy. Not only Credit Suisse, but also JPMorgan Chase & Co. and UBS Group AG, have recently changed their top leaders in China.
