Credit Suisse follows the leader

When it re-branded in January, Credit Suisse told the world it would be “thinking new perspectives”. It was hard to see much that was new in the bank’s move last month to merge its subsidiary private banks into a single autonomous entity. The Swiss number two is planning to combine Clariden Bank, BGP Banca di Gestione Patrimoniale, Bank Hofmann and Bank Leu with its brokerage business Credit Suisse Fides to create a new bank called Clariden Leu. Clariden Leu will have SFr112bn (e72.1bn) in assets, 55,000 clients and 1,800 staff. The new bank will have operations in five cities in Switzerland and 17 worldwide. It will remain a subsidiary of Credit Suisse, drawing on the parent group for asset management, investment banking and back office. Activities of Clariden Leu that are not wealth management related, will be transferred to the group. If we flash back seven months, the acquisition of UBS’s subsidiary private banks and GAM by Bank Julius Baer was set to create Switzerland’s largest pure-play private bank. It was to have two divisions, private banking and asset management. Within the combined private banking division there were SFr113bn in assets under management, a headcount of 3,500 in both divisions, branches in nine cities in Switzerland and 13 countries worldwide. Sound familiar? By 2008, the new Julius Baer was set to be generating additional profits of SFr50m per year. By contrast, Credit Suisse has announced that Clariden-Leu will generate Sfr100m in additional net income and have a cost-income ratio of 52 per cent by 2008. So, one is tempted to ask, which is the third force in Swiss private banking? It seems likely that Credit Suisse will follow UBS’s lead, with an exit in the medium term once the return on assets has been maximised within the group. The timeframe looks likely to be 2008, but given the current volume of M&A activity with Swiss targets still attracting a premium price, Clariden Leu may become a target before Credit Suisse has played to the end game. Cath Tillotson is head of research at wealth management strategy think tank Scorpio Partnership