(Bloomberg) -- Credit Suisse Group AG vowed to boost the business with rich clients and cut costs through simplifying technology as it seeks to emerge from two years of scandal and losses.
The bank on Tuesday outlined plans to grow the wealth unit by focusing on priority markets such as Hong Kong and Singapore, in a presentation for an “investor deep dive” that gave more detail on how it wants to reach its targets while improving risk management.
Credit Suisse announced some 800 million Swiss francs ($836 million) in savings from centralizing technology, including 200 million francs this year and again next, with an additional 400 million francs over the medium term. The bank last year laid out a firmwide cost-savings target of more than 1 billion francs, which earlier this month it said it plans to accelerate.
Chief Executive Officer Thomas Gottstein and Chairman Axel Lehmann are trying to regain investor confidence after scandals such as the blow-up of client Archegos Capital Management eroded investor confidence, weakened key businesses and prompted an exodus of talent. The Swiss lender has changed almost its entire executive team and half of its board of directors in the past year in an effort to move past the crisis.
Credit Suisse already presented its group-wide strategy in November, consisting of shrinking the investment bank and shifting about $3 billion of capital to the wealth management unit. Gottstein confirmed that plan on Tuesday, while saying it may be slowed down after clients cut back leverage more than expected in the past quarters.
“In principle, our plan continues to be to grow our lending book in wealth management,” he told analysts. “But given what happened during the last couple of quarters, it’s clearly a slightly different basis from where to grow.”
Tuesday’s update, which didn’t include any new overarching targets, was the first time investors also heard the vision of the new global wealth head Francesco De Ferrari, who started in January. The new executives in charge of technology, compliance and risk also outlined their strategies.
The wealth unit plans to double client assets under management for private market investments and expand programs that focus on sustainability and the next generation set to inherit wealth. Credit Suisse also expects mid- to high-single-digit growth in lending to rich clients by 2024, while rising interest rates are set to add 800 million francs in income.
Read more about Credit Suisse’s strategy
- Credit Suisse to Exit Prime Services in Sharper Wealth Pivot (1)
- Credit Suisse Targets Asia Wealth, But Controlled by Zurich (2)
- Credit Suisse to Shrink Investment Bank in Wealth-Led Overhaul
- Credit Suisse Weighs New Job Cuts Round After Loss Warning (4)
After its exit from Sub-Sahara markets, Credit Suisse said it may leave more regions where it doesn’t have sufficient scale, narrowing its focus to the 20 markets that drive the majority of the wealth unit’s business volume.
The bank highlighted progress in cutting risk as predictions of a global recession mount, saying it reduced its emerging markets credit exposure by 21% and its non-investment grade portfolio by 17% in the year ended in March. The Swiss firm also said it added about 500 people in its compliance division since 2019 and will spend about 70% more on cyber security this year than it did in 2020.
Risk chief David Wildermuth, who joined this year from Goldman Sachs Group Inc., said that he now sees room to gradually take a less conservative approach.
“We have the capacity to increase our risk,” he said. “There are good risk opportunities out there, and we are doing that bit by bit.”
