Credit Suisse (CSGN.S), which has been hit by a series of scandals, global strategy rejigs, and management changes, is still betting highly on China and intends to start a wealth business there in 2023, a senior Asia executive said.
“In spite of all these rumours flying around that Credit Suisse is pulling back or pulling out of China, China is a long-term play for us,” Benjamin Cavalli, head of its Asia Pacific wealth management business, told reporters in an interview.
The bank plans to start providing wealth management services in China in 2023 on the bank of acquiring complete ownership of its local securities venture, which is expected by the first three months of next year, Cavalli said.
Credit Suisse’s China expansion plan comes even as the bank is laying off employees and slashing costs elsewhere in its efforts to bounce back from a series of scandals and losses. In July, the Swiss bank appointed its asset management boss as the new CEO.
The plans for the China wealth business for 2023, which have not been announced before, also close in on the heels of some media reports that Credit Suisse was assessing its China business.
On Thursday, Reuters published that Switzerland’s second-largest bank, which has called 2022 a “transition” year, is considering cutting about 5,000 jobs across the group — around one position in 10.
Cavalli said that the bank is taking a long-term view of China, given the great potential in selling wealth management products to the wealthy in the world’s second-biggest economy.
Cavalli, who relocated to Hong Kong in the new position this year from Singapore, said:
“We will never go into a new market where we feel we have to have a payback of three or four years and pull the trigger, this is unlike Credit Suisse.”
China’s wealth management market settled at 29 trillion yuan ($4.2 trillion) as of June, according to official data, with banks underscoring that household wealth was multiplying faster than economic growth.
Chinese banks control the distribution of proprietary and third-party wealth products in the country where there is rising demand from the mass affluent and high-net worth individuals.
Credit Suisse Risk-Off Mode
Though Credit Suisse’s Chinese securities ventures had been suspended because of many factors, including staff layoffs, the bank has already replaced several senior executives and was in the process of recruiting more, Cavalli said.
A planned regulatory site review would soon follow, he said. He added:
“The securities joint venture full acquisition will hopefully be a Q4 or Q1 event next year.”
Two years ago, Credit Suisse grew its stake in the joint venture to a controlling 51% and has said it was aiming at acquiring complete ownership. Credit Suisse has already appointed 50 employees for the wealth business, including investment consultants, relationship managers, and those involved in managing discretionary offerings, among others, he said.
Buy Crypto NowThe process for wealth management license would ensue once the banks obtain approval to acquire full ownership of the securities venture.
“The wealth pool in China is significant. If I can just get 2%-3% of the wealth pool, that is a starting point and we would have done a lot already.”
With financial markets receiving a beating since late last year and inflation fears holding out, Credit Suisse’s wealthy customers in Asia, just the same as markets in other regions, are in a risk-off mode. Cavalli added:
“We see very little light at the end of the tunnel to suggest that there could be a potential recovery or that sentiment turns positive soon.”
Still, the bank’s wide footprint, with onshore wealth businesses in Australia, India, Japan, and Thailand, alongside its offshore wealth centres in Hong Kong and Singapore, have assisted it to balance some of the market volatility, he said.
($1 = 6.9021 Chinese yuan)
