Credit Suisse Group (CS) announced a major revamp in its organizational structure as well as in its management team. The move comes as the company focuses on expense reductions and efficiency improvements in light of the current regulatory environment. The changes will be effective at the end of this month.
The Private Banking and Asset Management Divisions of Credit Suisse will be merged and the new unit will become the company’s Private Banking & Wealth Management Division. It would be led by Hans-Ulrich Meister and Robert Shafir.
Further, Credit Suisse’s Investment Banking securities business in Switzerland will be transitioned into Private Banking & Wealth Management division and will be accountable to Robert Shafir and to Hans-Ulrich Meister. Also, the Solution Partners group will report to Hans-Ulrich Meister and Robert Shafir.
Specifically, Hans-Ulrich Meister will carry on leading Private Banking in Switzerland, EMEA and Asia Pacific, as well as all Swiss client businesses, while Robert Shafir will head Private Banking & Wealth Management Products and Private Banking in the Americas.
Further, Eric Varvel and Gael de Boissard will lead the Investment Banking Division. Particularly, Eric Varvel will oversee Equities & Investment Banking Department and will serve as Head of Asia Pacific region. Gael de Boissard will lead Fixed Income Department, serve as Head of EMEA region and will be appointed to the Executive Board. The joining to the Executive Board of the bank will happen as of January 1, 2013.
However, Osama Abbasi and Fawzi Kyriakos-Saad, who head Asia Pacific and EMEA regions, respectively, will depart as a result of this restructuring. Moreover, Walter Berchtold, Chairman Private Banking, will also step down and leave the company.
Our Viewpoint
As a matter of fact, recently, Credit Suisse announced its plan to achieve CHF 4.0 billion ($4.2 billion) in cost savings by 2015. In addition to the business overhaul, the company is also opting for layoffs to achieve its target.
With the near-term outlook of a rebound in the economy remaining uncertain, banks are increasingly resorting to aggressive cost-cutting initiatives to maintain a sound capital buffer in order to withstand any financial crisis.
Recently, another Swiss banking giant, UBS AG (UBS), announced slashing 10,000 jobs. The layoffs are part of the bank’s efforts to reorganize its business by developing core businesses and downsizing troubled units.
Notably, UBS has been trimming down workforce in its investment bank unit over the past year and aims to refocus on building its market-leading wealth management and asset management business.
We believe that with a protracted economic recovery, bolstering revenue has become a challenge. Therefore, sustaining and elevating profitability through business overhaul and cost reduction measures, including layoffs, are what several banks are looking at.
Until a recovery in revenue occurs, such actions are anticipated to continue to help strengthen profit levels and capital ratios. Hence this overhaul is a strategic fit for Credit Suisse.
Credit Suisse currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
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