Photographer: Fabrice Coffrini / AFP / Getty Images
Photographer: Fabrice Coffrini / AFP / Getty Images
Credit Suisse CEO Thomas Gottstein said he would further consider separating the asset management unit from the rest of the bank following the collapse of Greensill Capital, while trying to contain reputational damage from the financial scandal. supply chain.
Making asset management as an independent entity “could be part of the plan,” Gottstein said in a Bloomberg Television interview, days after the bank replaced and took over the head of the industry. away from direct monitoring of the wealth management unit. “Having a property company around that could be something we pursue,” he said, adding that Greensill’s relationship for Credit Suisse is an asset management problem.
The Swiss bank is facing the worst crisis since a spy scandal a year ago, after it scrapped $ 10 billion of supply chain financial funds managed by Greensill over concerns about their valuation. As yields deepen, the bank is confronted with legal threats from investors, potential financial losses and regulatory scrutiny. He is now turning to Ulrich Koerner, former chief executive of UBS UBS Group, to revive the asset management unit, replacing 30-year-old veteran Eric Varvel.
Read More: Credit Suisse replaces Varvel, stopping bonuses as clients melt
“Clearly, Greensill is attracting attention and something we are working through now but the operational results we have in the first two months show that we are on the right track,” said Gottstein, speaking ahead of the bank’s Asian Investment Conference. Despite the turmoil, the bank had its best start to year in a decade, with revenues at the securities unit rising more than 50% through February.
Gottstein’s comments indicate that the steps taken just last week to reinforce Greensill’s crisis may not yet be enough. In addition to replacing Varvel, he has canceled senior staff bonuses and announced an investigation into his exposure to the failed Lex Greensill trading finance empire. When asked about the high-level suspension by the head of asset management, Gottstein said any further decisions would be subject to board review.
Read More: Matt Levine’s Money Material: Greensill was not just a financial supply
The study will determine if there were deficiencies in lines of defense, but it is too early to talk about the possible outcomes, or who else might be responsible, Gottstein said. “I’m really confident we’ll come out stronger from this program,” he said. “It’s a learning process.”
Clients from wealthy people in the Middle East to the Swiss pension fund are expressing their anger over a potential investment loss, threatening key relationships far beyond the asset management industry.
The money donated by fund managers was cited among the safest. But they contained investments linked to the future sale of Greensill lenders, far beyond traditional supply chain finance. Investors are losing out as these funds are liquidated, with some considering a lawsuit.
Read More: Credit Suisse Says Expected Fund Deficits May Investors May Sue
The bank has so far returned about $ 3.1 billion to investors and said it has $ 1.25 billion more in cash over the four currencies. The lender lent Greensill approximately $ 140 million at the end of last year, and $ 50 million was recovered.
Gottstein said that he was “100% focused now on getting so much money back for our investors. “
Risk control
Koerner, whom Gottstein described as the “right person” to strengthen asset manager lines of defense, had previously hired an UBS Group AG study to link the asset management business with DWS Deutsche Bank. Those 2019 conversations he paused about disagreement over who would retain majority control.
The Greensill debate is the latest in a series of misfortunes by the fund manager, which until last week’s decisions were held within the much larger international wealth management industry. Gottstein said he has long had doubts about the logic of that arrangement.
Greensill’s affairs, he said, accelerated its decision to share asset management in its own region with the “first and second line regional support it needs and deserves.”
“Risk management has always been a priority,” he said. “I’m really looking at that – not now, I was, and I will be. ”
Asian Opportunities
Beyond Greensill, Gottstein said the bank was aiming for growth in Asia. The region already accounts for 20% of the bank’s revenue and Credit Suisse is looking to own 100% of its joint ventures in China in addition to obtaining the necessary licenses to advise to the richest in China.
Gottstein also pointed out that the bank is looking for opportunities to be part of the ongoing consolidation of the banking industry within Europe.
“There are different opportunities for us in a number of areas, particularly in private banking,” he said. The bank’s growth strategy is “largely an organic strategy, but we are appropriate to look at non-organic opportunities as well.”