Credit Suisse Group plans to integrate the operational functions of its private-banking and investment-banking divisions into a new global entity, as the Swiss bank seeks to cut costs and improve profits.
The new unit, which will be combined effective Jan. 1 and report to Chief Financial Officer David Mathers, will be led by Gary Bullock.
This latest move, which seeks to make the two businesses work more closely with each other, comes as the banking industry faces a profit squeeze amid a global crackdown on tax havens, dismal financial markets, deteriorating economic prospects and tougher regulators.
The move at Credit Suisse, Switzerland's second-largest bank by assets, comes after it said last month that it will fold its Clariden Leu subsidiary into the rest of the bank, eliminating a brand that has been around for more than 250 years.
It also recently said it would split its European private-banking operations into two, to better address the diverging needs of clients in Western Europe and emerging Europe.
The bank is going the opposite way at the investment bank, where it plans to fold emerging-market currencies and fixed-income operations into the global foreign exchange division. The move, announced Thursday, is a response to clients' requests to have only one desk to turn to for currency deals, it said.
This new desk will be led by Ben Shooter, who now heads European currency sales, it said.
Meanwhile, Mr. Bullock will work closely with Romeo Lacher, head of private-banking operations, and Stef Toffolo, head of investment-banking operations, as well as with the respective management teams to ensure business continuity and a smooth transition.
"These changes will accelerate the development of more integrated operating and securities processing platforms across the bank, improving client access to our products and reducing the cost of delivery," the bank said in its memo to all staff.
"These measures will also significantly contribute to the bank's overall cost-reduction efforts," Credit Suisse added.
Credit Suisse plans to reduce annual expenses by 2 billion Swiss francs ($2.1 billion) and cut around 3,500 jobs by 2014.
These steps to boost efficiency come as the banking industry battles a raft of challenges. Among them are requests from regulators to raise capital and reduce risks to better withstand fallout from the ongoing European sovereign debt crisis.
The loss of confidence in the banking system has resulted in a sharp fall in activity on the interbank market, which in turn is leading to higher refinancing costs and liquidity bottlenecks, warned Thomas Jordan, the Swiss central bank's vice president.
"The deterioration in the global economic environment hasn't left the Swiss big banks unscathed," he said at the Swiss National Bank's annual media conference Thursday. "In the second half of 2011, their profitability suffered from the volatile financial market situation as well as from low customer activity levels."
The central bank welcomes efforts by the two big banks, Credit Suisse and UBS AG, to significantly reduce their risk exposure and boost capital, but more is needed, he said.
A second area of concern for the banks is the global crackdown on tax havens, which is driving up costs for Swiss private banks.
Since Europe and the U.S. got tough on tax havens, Swiss banks have been forced to reinvent their business models and offer their clients more than protection from tax authorities. Switzerland recently negotiated deals with Germany and the U.K. that aim to make sure that taxes on wealth managed in Switzerland are paid, while preserving the privacy of banking clients.
The changes in dealing with untaxed assets come at a difficult time for the industry. Fees are falling because clients are shying away from trading, even as the value of their assets is declining due to tough financial markets.
—Alexandra Fletcher in London contributed to this article.
No comments:
Post a Comment