Thiam's CS: The Seven Surprises of Today

The new strategy of Credit Suisse under the guidance of Chief Executive Tidjane Thiam was the talk of the financial market for months. Now we know: The Swiss bank kept a few surprises in store.

Some of the changes at Switzerland's second-biggest bank had been leaked over the past months, but some elements of the new strategy remained secret until this morning.

1. IPO of Swiss Bank

Credit Suisse will take its Swiss unit to the stock exchange in a partial initial public offering, with the deadline set for the end of 2017. This is a bold step that makes a lot of sense, because investors are given the opportunity to invest in a bank that isn't subject to the unpredictability of global investment banking. In other words: An attractive share offering, based on the strengths of CS in its home market, which it aims to bolster even further. Making Thomas Gottstein head of the Swiss banking unit also surprised the market.

2. Splitting of Investment Bank

CEO Tidjane Thiam isn't going to cut the investment bank to size, rather he aims to make it fitter. Part of the plan is to split it up into a Global Markets unit and an Investment Banking & Capital Markets division. That will yield savings in London, or in the words of the bank: «Right-sizing the bank's footprint in London.»

3. New Executive Board

Everybody eagerly awaited for the new set up of the executive board. Analysts expected Pamela Thomas-Graham and Robert Shafir to depart. The disappearance of Swiss and co-Private Banking boss Hans-Ulrich Meister from the top executive however comes as a massive surprise. Gaël de Boissard is an investment banker, who will leave.

Thomas Gottstein takes charge of the Swiss Universal Bank, a job that Meister might have been able to master. Gottstein was hitherto in charge of the very rich private banking clients.

The inclusion of Helman Sitohang as head of Asia into the executive board was anticipated by And a rival financial news site in Zurich predicted on Monday that Iqbal Khan would take over the International Wealth Management unit.

4. New Functions

Credit Suisse introduced the post of chief operating officer on the board level. Thiam installed the Frenchman Pierre-Olivier Bouée, one of his faithful, in this position.

The lumping together of the two wealth management units into International Wealth Management might not be particularly surprising, but it is nevertheless a bold step. This is where the true potential of CS lies.

Following Pamela Thomas-Graham's footsteps on the board level is Lara Warner, taking the job as chief compliance and regulatory affairs officer.

5. Further Restructuring in Western Europe

It comes as a surprise that the down-sizing in Western Europe, executed by Hans-Ulrich Meister over the past years, doesn't suffice. CS said today that a further reorganization and cost cuts were necessary in this region. Operations had to become more efficient and the bank wanted to concentrate on markets with profitable growth.

6. Capital Increase in Two Steps

The capital increase was much talked about ahead of today's presentation. It will now come in two steps. The bank will strengthen its balance sheet with a rights offering worth 4.7 billion francs and a private placement of a further 1.35 billion. This will keep the injection of fresh capital at well below 10 billion.

7. Surprisingly Good Quarterly Result

CS surprised with the figures for the third quarter 2015. The profit of 779 million francs was far better than many analysts predicted. And the bank attracted new money at an above average rate – even after the already pleasing figure in the second quarter. The bank is clearly in very good shape in the growth markets of Asia. Assets under management meanwhile, and this is the less pleasing aspect of the report, dropped because of the Chinese stock market crash in late summer.

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