Will Credit Suisse Buy An Asian Wealth Management Business?

It has been widely reported that Credit Suisse will be announcing a significant shake-up when Tidjane Thiam steps up to the podium later this month.

Over the weekend Swiss media reported that the plan could include selling stock in an offering that may raise 6 billion to 8 billion Swiss francs, and may also contain job losses, as “an essential tool” that would allow Credit Suisse to free resources for investment in Asia. It is known Thiam is an admirer of the Asian market and the long-term wealth management opportunities.

While it may be virtuous and idealistic to want grow the private banking business organically, with the dearth of talented wealth managers in Asia and the price of buying in even average talent extremely overpriced, it might take so long, and cost so much, that a productive momentum never fully kicks in. Therefore acquiring an established wealth business must surely be under consideration.

An acquisition of Julius Baer has been ruled out on more than one occasion by Thiam and therefore we have to take his word on that. So what could Credit Suisse be lining up to procure?

Given that the centre of gravity of the wealth management world has officially shifted to the east, acquiring a wealth management or financial services business with strong exposure across Asia would appear to be a natural fit for both Thiam and Credit Suisse.

News that Standard Chartered’s new Chief Executive Officer Bill Winters is planning to trim up to 1000 senior staff positions from the bank and that the bank is also considering to sell assets and cut clients as part of their own strategic review, might have flashed across the radar in Zurich.

Would Standard Chartered welcome an approach for their private bank? Well this wouldn’t be the first time that Standard Chartered sold a wealth management business to a Swiss suitor. A couple of decades ago it sold its then wealth management business to what is now UBS, so there is a precedent.

Another wealth business in the region that could be on Tidjane Thiam’s shopping list is RBC Wealth Management. Like Standard Chartered the Canadian lender recently exited its Swiss based business and has lately seen some high profile senior wealth managers in Asia leave the bank.

In Asia several banks with a core business not dependent on their private wealth divisions are now becoming seriously concerned about the exposure to risk and reputational damage from private wealth than merely making a profit.

Numerous international banks are currently running exercises in Hong Kong and Singapore on business lines that are not directly relevant to being physically located in Asia.

Principle concern for many is the threat that undeclared or black money finds its way onto their books and regulators come down on them hard, not to mention the lingering damage to the brand. Getting a good price to exit the ultra competitive Asian wealth management business arena might look like an attractive option for several mid tier players.

So watch this space as they say; by the end of this month Thiam could well have a significant war chest and be ready to buy in order to secure more market share of the world’s fastest growing wealth management region. Which could just work out well for Asia, for private banking professionals and for Tidjane Thiam and Credit Suisse.


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