Benefits of group restructuring

The idea of embedding CSAM within CSFB, together with investment banking, means Bob Parker’s efforts can have a direct impact on group earnings and share price. The medium term objective over three to four years is for CSAM to contribute 10 per cent of group profits. CSAM currently manages $335bn (E270bn) of the $970bn group total, but over three years, Mr Parker hopes to hit $500bn. In order to achieve this profitably, he believes, CSAM must be expanded globally, through integrated platforms, rather than the old system of managers running their own fiefdoms.

“We are now running virtually functionally worldwide,” says Mr Parker,” noting that key rival UBS has gone down the same route. “Our belief is in global functions, not geographic CEOs.” These were abolished soon after Henry Wegmann, previously CEO for Europe, left last year.

The disadvantage of the new approach, however, is that local opportunities in markets such as Spain can be missed. For example, CSAM’s cross-border Luxembourg funds are in FCP form, rather than the more popularly accepted, open-ended Sicavs. This means guaranteed products sold by key Spanish distributor Banco Santander cannot invest in CSAM’s underlying funds according to Spanish law. “Nordea can pump E700m straight in, but we cannot. It’s too expensive to set up a new Sicav just for such a product and as a result, we have lost a lot of business from Santander,” commented one group insider.

The popular view outside Credit Suisse, however, is that one fiefdom, that of Zurich, is gaining strength in the group since John Mack’s resignation, with power increasingly concentrated in the hands of Oswald Gruebel. Mr Gruebel previously co-headed Credit Suisse, together with Mr Mack, who oversaw investment banking and asset management under the CSFB umbrella.

The real reason for the management changes, says Mr Parker, is that Credit Suisse has left one era and entered another. “You have to ask yourself whether it is logical for a financial services firm to have two heads,” says Mr Parker, who believes this works only in exceptional circumstances, such as the recent period of structural change.

Gruebel: man at the top in Zurich