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

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

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

“Despite all these rumors going around that Credit Suisse is pulling out or withdrawing from China, China is a long-term game for us,” Benjamin Cavalli, head of its wealth management business in Asia, told Reuters. -Peaceful.

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

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Credit Suisse’s China expansion plan comes even as the bank cuts jobs and costs elsewhere in its efforts to recover from a series of losses and scandals. In July, the Swiss bank named its asset management boss as its new CEO. Read more

Plans for the wealth management business in China for next year, which were not previously announced, also closely follow some media reports that Credit Suisse was reviewing its business in China.

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

Cavalli said the bank takes a long-term view of China, given the huge potential to sell 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 three or four year return on investment and pull the trigger, it’s not like Credit Suisse,” said Cavalli, who moved in Hong Kong in the new role this year from Singapore.

China’s wealth management market stood at 29 trillion yuan ($4.2 trillion) in June, official data showed, with banks pointing out that household wealth was rising 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 high net worth individuals and the affluent masses.

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Although Credit Suisse’s Chinese securities business has been delayed due to many factors, including staff departures, the bank has already replaced some senior executives and was in the process of hiring more, Cavalli said.

A regulatory inspection of the site will follow soon, he said.

“The full acquisition of the securities joint venture will hopefully be a fourth or first quarter event next year,” the banker said.

Two years ago, Credit Suisse increased its stake in the joint venture to 51% and said it was seeking full ownership.

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

The process of obtaining the Wealth Management License would follow once the bank was granted permission to fully take over the securities business.

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

With financial markets battered since late 2021 and inflation concerns lingering, Credit Suisse’s high net worth clients in Asia, like markets in other regions, are in risk aversion mode.

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

Yet the bank’s extensive footprint, with onshore wealth management businesses in Japan, Australia, Thailand and India, in addition to its offshore wealth management centers in Singapore and Hong Kong, has helped balance out 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

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