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 Credit Suisse is emphasizing wealth management and growing in Asia,
echoing moves by rival UBS, and joins rivals including
Barclays and Deutsche Bank as well as UBS in scaling back
investment banking as tougher regulations squeeze profitability.
Thiam, 53, hired from insurer Prudential <PRU.L> in March and who
officially joined in July, also said he will float shares in its
domestic Swiss bank, as he set out his vision for Switzerland's
second-biggest bank almost four months into the job.
Chairman Urs Rohner had said in March Thiam's appointment did not
signal a major shift in strategy.
But the new CEO, a former Ivory Coast government minister who
replaced American Brady Dougan, said weak quarterly results
underscored the Zurich-based bank's need for change. Third-quarter
pretax income fell 34 percent to 861 million francs, primarily
reflecting an 8 percent drop in net revenue.
"That should validate in a way the strategy and confirms some of the
insights that have guided us," Thiam told reporters. "The ambition
in this strategy is to grow fundamentally. To grow and to resolve
the capital issue for good."
Analysts noted the cash call was in line with expectations, but was
countered by the weak results.
"We see today's announcement to shrink the investment bank, attack
the cost base in earnest and simplify group structure will, over
time, drive value creation," said Huw van Steenis at Morgan Stanley.
"But a weak Q3 in FICC (fixed income, currencies and commodities)
and heavier costs will clearly drag before Credit Suisse puts flesh
on the skeletal new plan."
Credit Suisse shares fell as much as 4.5 percent and by 0930 GMT
were down 2.9 percent. Year to date the stock has dropped nearly 4
percent against a rise of more than 11 percent for UBS, Reuters data
show.
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Thiam said Credit Suisse would put more focus on managing the
fortunes of the world's wealthy, especially in emerging markets,
will reduce the size of its investment bank and cut 2 billion Swiss
francs in annual costs.
Thiam, who spearheaded strong growth in Asia in his previous job at
Prudential, said he wants to more than double Credit Suisse's income
from Asia to 2.1 billion francs by 2018.
He also aims to increase the bank's international wealth management
income by 62 percent to 2.1 billion by 2018, and grow income in
Switzerland by 44 percent to 2.3 billion.
He plans to cut gross costs by 3.5 billion francs by end- 2018 and
will invest 1.5 billion francs in growth initiatives, to reduce the
cost base to between 18.5 billion and 19 billion.
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"The new strategy is very comprehensive and probably more than
anticipated," said one of the bank's 20 biggest investors, who asked
not to be named. But the investor said there was a lack of detail on
revenue growth plans and said Thiam needed to show how he will
achieve his targets.
The bank will reduce the number of its staff in Switzerland by a net
1,600 over the next three years, and will cut the number of its
investment bank staff in London. Thiam estimated 1,800 of its
London-based staff did not need to be in such a costly location.
It also aims to raise 1.35 billion francs from selling shares to a
number of investors at 5.5 percent below their price on Tuesday, and
to raise a further 4.7 billion via a rights issue to existing
investors.
The bank had been widely expected to raise between 5 and 10 billion
francs, as it tackles a capital position which trails rivals and has
been a persistent concern for investors.
Thiam said the bank's common equity capital adequacy ratio should
rise to 12.2 percent of risk-adjusted assets, and the bank aims to
keep that ratio above 12 percent.
By comparison, UBS is one of the strongest capitalized banks in the
world, with a common equity ratio of 14.4 percent at the end of
June. The average for Europe's 24 biggest banks was 13.2 percent,
lifted by high levels at Nordic lenders.
Thiam also aims to streamline the bank by creating three geographic
divisions: a Swiss universal bank, Asia Pacific, and International
wealth management; and two investment bank units: global markets,
and investment banking and capital markets.
Thiam intends to reduce capital used by the investment bank, mainly
in its "macro" businesses, which includes foreign exchange and rates
trading products, and where the bank plans to reduce risk-weighted
assets by 72 percent by year end.
($1 = 0.9554 Swiss francs)
(Editing by Greg Mahlich and David Holmes)
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