Exclusive: Embattled Credit Suisse aims to launch wealth business in China next year

A Credit Suisse bank logo is pictured in Geneva, Switzerland, June 9, 2022. REUTERS/Denis Balibouse

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SINGAPORE, Sept 2 (Reuters) – Credit Suisse ( CSGN.S ), which has been hit by a series of scandals, management changes and changes in global strategy, is still betting big on China and plans to launch a wealth business there next year , said a senior executive in Asia.

“Despite all these rumors that Credit Suisse is withdrawing or withdrawing from China, China is a long-term play for us,” Benjamin Cavalli, head of the Asia-Pacific wealth management business, told Reuters in an interview.

The bank aims to start offering wealth management services in China next year amid securing full ownership of its domestic securities business, likely by the first quarter of next year, Cavalli said.

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Credit Suisse’s plan to expand into China comes even as the bank cuts jobs and costs elsewhere in an effort to recover from a series of losses and scandals. In July, the Swiss bank named its head of asset management as its new chief executive. Read more

The previously unreported China wealth plans for next year also come on the heels of some media reports that Credit Suisse is reviewing its China business.

Reuters reported on Thursday that Switzerland’s second-largest bank, which has called 2022 a “transition” year, intends to cut around 5,000 jobs across the group – about one job in 10. read more

Cavali said the bank is taking a long-term view of China, given the huge potential in selling wealth management products to the wealthy in the world’s second-largest economy.

“We will never go into a new market where we think we have to have a payback in three or four years and pull the trigger, that’s unlike Credit Suisse,” said Cavalli, who moved to Hong Kong in the new position this year from Singapore.

China’s wealth management market stood at 29 trillion yuan ($4.2 trillion) as of June, official data showed, with banks stressing that household wealth is growing faster than economic growth.

Chinese banks dominate the distribution of proprietary and third-party wealth products in the country, where there is growing demand from the high-net-worth and super-wealthy.

RISK MODE

Although Credit Suisse’s China securities venture has been delayed by many factors, including staff departures, the bank has already replaced some senior executives and is in the process of hiring more, Cavalli said.

An inspection of the regulatory site is expected to follow soon, he said.

“We hope the full acquisition of the securities joint venture will be in the fourth or first quarter of next year,” the banker said.

Credit Suisse raised its stake in the joint venture to a controlling 51% two years ago and said it wanted to take full ownership.

Credit Suisse has already hired 50 staff for the wealth business, including relationship managers, investment advisers and those involved in managing discretionary offerings, among others, he said.

The wealth management license process will follow once the bank has been approved to take full ownership of the securities entity.

“The wealth in China is considerable. If I can get just 2%-3% of the fund, that’s a starting point and we would have already done a lot.”

As financial markets tumble from late 2021 and inflation concerns persist, Credit Suisse’s wealthy clients in Asia, like markets in other regions, are in risk-averse mode.

“We see very little light at the end of the tunnel to suggest that there could be a potential recovery or that sentiment will soon turn positive,” Cavalli said.

Still, the bank’s widespread footprint, with onshore wealth businesses in Japan, Australia, Thailand and India, in addition to its offshore wealth centers in Singapore and Hong Kong, have helped it offset some of the market volatility, he said.

($1 = 6.9021 Chinese Yuan)

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Reporting by Anshuman Daga; Editing by Sumeet Chatterjee and Kim Coghill

Our standards: The Thomson Reuters Trust Principles.

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