Credit Suisse has set its sights on aggressive expansion in the Asia-Pacific, and will be investing as much as 900 million Swiss francs (S$1.26 billion) in the region over the next three years.
The amount comprises the lion's share of 60 per cent of planned investments of 1.5 billion Swiss francs in "divisional growth initiatives" announced by the group last October.
The heart of the strategy is a reorganisation of the Asia-Pacific business into an autonomous unit, that will result in a more focused and expedited offering targeted at entrepreneurs, which combines private banking and investment banking services. This comes at a time when most other banks are downsizing their investment banks.
The vision is to become the "trusted entrepreneurs' bank".
Says Francesco de Ferrari, Credit Suisse head of private banking Asia Pacific: "Our clear objective is to be the bank that serves and helps entrepreneurs to grow and develop their businesses and generate wealth. . .
"While our strategy aims to right-size the investment bank because the new capital regime makes some parts of that business very costly to run, some (aspects) of investment banking are critical to be able to run a private bank in the emerging markets."
Credit Suisse aims to service entrepreneurial clients at every stage of their business growth. This includes providing financing in the growth stage; access to capital markets such as bond and equity markets; and structuring services to turn illiquid stock holdings into liquid wealth.
The bank recently announced two major moves in its reorganisation. One, it is setting up an Asia-Pacific financing team to provide a centralised structuring, risk management and syndication platform for strategic financing for ultra high net worth clients and corporate clients. The team will be headed by Carsten Stoehr.
The various financing activities used to sit in different units.
"The ability to put together all the financing businesses allows better oversight of risk, and enables us to direct client demand through a one-stop shop to the right risk bucket, which allows us to gain economies of scale and velocity of decision making. Our ability to stand by the entrepreneur and help finance his growth is a critical element of the plan," says Mr de Ferrari.
The bank has also created an ultra high net worth entrepreneur coverage unit, to be headed by Vikram Malhotra who will report to Helman Sitohang, chief executive for the Asia-Pacific. Mr Malhotra, previously head of investment banking for the region, will now oversee the most significant ultra high net worth entrepreneur clients, look into co-investment opportunities, and strategically allocate balance sheet to meet clients' financing needs.
The bank defines ultra high net worth clients as those with at least 50 million Swiss francs in assets under management or 250 million Swiss francs in net wealth.
Mr de Ferrari says: "As we want to grow the emerging markets, we come to the realisation that we have to be very close to clients and to understand the different configurations of different countries. . . We think this will give us better decision making and better velocity in taking some critical decisions to serve clients.
"Most global institutions today when you need to approve a big credit, you need to go to head office. We're more empowered in Asia and we think over time that will make a big difference."
He adds: "Everyone on the Street is watching with a high level of curiosity to see how this is going to work, because no bank has this set-up. We're global but we run this business with regional empowerment."
Credit Suisse has set ambitious targets for the Asia-Pacific business. The region's pre-tax income grew 52 per cent between 2013 and 2015 to 1.14 billion Swiss francs. It is now expected to double to 2.1 billion Swiss francs in 2018.
Client assets under management, which stood at 150.4 billion Swiss francs at end-2015, are expected to grow by 66 per cent to 250 billion Swiss francs in 2018. The number of relationship managers is set to increase from 590 currently to around 800. Cost-to-income ratio is expected to drop from 69 per cent to 60 per cent.
So far the business has been efficient. While it generated 26 per cent of group pre-tax income, its share of risk-weighted assets in 2015 was 10 per cent. This is expected to rise to 16 per cent in 2018. The region's share of group leverage exposure is also expected to rise from 10 to 18 per cent in 2018.
Mr de Ferrari says a backdrop of economic uncertainty has not necessarily affected entrepreneurs negatively. Those in businesses that serve the growing segment of middle-class consumers through technology, healthcare and other products and services are booming. "China has created more billionaires in the last 12 months than any other country, maybe not in the area of commodities but in technology. . . Wealth creation is still significant."
He adds: "When you have market dislocations there are good opportunities for smart investors. Some of the valuations of companies are depressed today, and the key topics are bond or share buybacks. Probably we'll see an increased wave of take-private transactions where entrepreneurs are very confident about their businesses but don't see that in this market they are offered fair valuations. They're optimistic enough to buy their shares back. When they float (the companies) again, there is a lot of wealth to be generated."
Recently, OSIM International announced in a press release that Credit Suisse Singapore is acting as exclusive financial adviser to its chairman Ron Sim in his recent cash offer to privatise OSIM.
This article was first published on March 23, 2016.
Get The Business Times for more stories.