Credit Suisse overhauls asset management under regulatory glare

Credit Suisse is overhauling its asset management business amid regulatory investigations into its dealings with collapsed Greensill Capital, the bank said on Thursday, warning the scandal could hit its results and client confidence.

Switzerland's second-biggest bank and its asset management arm have been reeling over the collapse of around $10 billion of funds related to British supply chain financier Greensill, heaping pressure on CEO Thomas Gottstein, who said on Tuesday he was scrutinising the business's structure.

In its annual report, the lender said Swiss regulator FINMA was one watchdog looking into the matter, and reviewing it in relation to the bank's "Pillar 2" buffer - a pool of capital banks have to ensure they can withstand risks.

Credit Suisse also named Ulrich Koerner as the new head of asset management and said it would separate the business into its own division from April 1. It is currently part of the international wealth division run by Philipp Wehle.

In the annual report, the bank said some unidentified investors had threatened litigation over the matter, whose ultimate cost "may be material" to operating results.

"We might also suffer reputational harm associated with these matters that might cause client departures or loss of assets under management," it added.

Vontobel analyst Andreas Venditti said the bank's emphasis of the new asset management division's "strategic importance" meant a sale of that business was unlikely.

Credit Suisse shares were up 1.5% in early trade.

Koerner returns to the bank from arch-rival UBS, where he most recently served as senior adviser to the CEO from 2019 to 2020. He ran UBS Asset Management from 2014 to 2019. Koerner was previously a senior executive at Credit Suisse Financial Services and ran its Swiss business.

Current asset management head Eric Varvel, who is also chairman of Credit Suisse's investment bank and head of its U.S. holding company, will focus on his other roles.

"Ulrich Koerner is an excellent addition to our leadership team, reinforcing its values and performance culture," Gottstein said in a statement. "Ueli is a strong leader and strategic thinker with proven ability in business development and profitable growth in asset management, as well as in business transformation."

Three senior asset management employees who helped oversee the Greensill funds, including the head of the business for Europe, the Middle East and Africa, have temporarily stepped aside.

The bank's annual report showed the payout and vesting of bonuses for a number of senior employees involved in these matters, "up to and including Executive Board members", had been suspended.

 

(Reporting by Brenna Hughes Neghaiwi and Rachel Armstrong, Editing by Silke Koltrowitz and Mark Potter)