Exclusive: Troubled Credit Suisse plans to launch China wealth business next year

The logo of Credit Suisse Bank in Geneva, Switzerland on June 9, 2022. REUTERS/Denis Balibouse

SINGAPORE, Sept 2 (Reuters) – Credit Suisse (CSGN.S), rocked by a string of scandals, management changes and a global strategy shake-up, remains betting big on China and plans to launch a wealth business there next year , said an Asian executive.

Benjamin Cavalli, head of wealth management for Asia Pacific at Credit Suisse, told Reuters in an interview: “Despite the rumours of Credit Suisse pulling out or pulling out of China, China is a big deal for us. long game.”

Cavalli said the bank aims to start offering wealth management services in China next year, as it could take full ownership of its local securities business in the first quarter of next year.

Credit Suisse’s China expansion plans come as the bank struggles to recover from a series of losses and scandals and is cutting jobs and costs elsewhere. In July, the Swiss bank named the head of its asset management unit as its new CEO.read more

The previously unreported plans for China’s wealth business next year also came on the heels of some media reports that Credit Suisse was reviewing its China business.

On Thursday, Reuters reported that Switzerland’s second-largest bank, which is calling 2022 a “transition” year, is considering cutting about 5,000 jobs across its group, or about a tenth.read more

Cavalli said the bank has a long-term view of China, given the huge potential of the world’s second-largest economy to sell wealth management products to the wealthy.

“We’re never going to enter a new market where we think we have to get a return in three or four years and pull the trigger, unlike Credit Suisse,” said Cavalli, who is from Singapore this year.

China’s wealth management market was worth 29 trillion yuan ($4.2 trillion) as of June, official data showed, with banks emphasizing that household wealth is growing faster than the economy.

There is growing demand from high net worth individuals and the mass affluent in China, where Chinese banks dominate the distribution of own and third-party wealth products.

safe haven fashion

Although Credit Suisse’s China securities business has been delayed by a number of factors, including staff departures, the bank has replaced some senior executives and is hiring more, Cavalli said.

He said the expected regulatory site inspections would take place soon.

“The full acquisition of securities JVs is expected to be an event in the fourth or first quarter of next year,” the banker said.

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

Credit Suisse has hired 50 people for the wealth business, including relationship managers, investment advisers and people involved in managing discretionary products, he said.

Once the bank is approved to fully own the securities business, the wealth management license process will follow.

“China’s wealth pool is important. If I can get 2%-3% of the wealth pool, that’s a starting point, and we’ve done a lot.”

With financial markets battered since late 2021 and inflation fears lingering, Credit Suisse’s wealthy clients in Asia are in a risk-off mode similar to markets elsewhere.

“We see very few signs at the end of the tunnel that there may be a recovery or that sentiment will soon turn positive,” Cavalli said.

Still, the bank’s onshore wealth business in Japan, Australia, Thailand and India and its broad footprint in offshore wealth hubs in Singapore and Hong Kong have helped it balance some market volatility, he said.

(1 USD = 6.9021 RMB)

Reporting by Anshuman Daga; Editing by Sumeet Chatterjee and Kim Coghill

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