Credit Suisse is tinkering as its main engines misfire. Switzerland's second biggest bank by assets wants to find a way to include part of its asset management business within its Swiss universal bank arm. As first-quarter results will probably show, boss Tidjane Thiam's main issues are actually huge investment bank trading losses and new money inflows from clients of the wealth division that will probably be tangibly below cross-town rival UBS's. It needs stability, not more tweaks to a six-month-old strategy.
Thiam has already had to eat humble pie. In March he performed a U-turn over his October decision to hang on to some of the bank's most profitable - but also riskiest - trading businesses. Big losses mounted as market conditions worsened, and Thiam said he hadn't been fully aware of the scale of the exposures. Selling off a big chunk of the bank's distressed debt portfolio earlier this month has dialled back the risk. Thiam now needs to demonstrate that he has full control.
In that context, another reorganisation could be a distraction. Asset management is a small business at Credit Suisse - it accounted for just five per cent of the group's pre-tax profit in the first half of last year. And ensuring Swiss assets under management can be serviced by its banking operations in the same country seems logical. But Credit Suisse still needs its local regulator's say-so to enact the change, says a person familiar with the situation. That adds to the impression that the initial October restructuring was overly convoluted and poorly thought through.
A bigger problem might be a lack of pep in wealth management. High asset valuations are prompting the rich to keep their assets in cash, giving private banks zilch. Credit Suisse said on March 23 that it had recorded 15.2 billion Swiss francs of net new money since the start of the year. With just six days from then until the end of the quarter it's unlikely that new money inflows would have exceeded the 29 billion Swiss francs that UBS pulled in. Small may sometimes be more beautiful, but for Credit Suisse it's the biggest businesses that are worthiest of the most attention.
