Credit Suisse's new chief signals strategy shift after earnings beat

By Joshua Franklin

ZURICH (Reuters) - Credit Suisse Group AG's new Chief Executive Tidjane Thiam signalled a strategy shake-up on Thursday, designed to focus on banking for the world's wealthy and away from riskier securities activities.

The Swiss bank's shares jumped more than 1 percent to a 14-month high, boosted by higher-than expected quarterly earnings.

Former Prudential Plc head Thiam took over as head of the Zurich-based lender only three weeks ago and investors have been watching for any clues on his plans, as well as any hints of a widely-expected move to tap shareholders for additional capital.

Thiam said he was leading a strategic review and would set out a strategy before the end of the year, but indicated it will focus on a move towards less volatile wealth management.

"We want to rebalance towards private banking and wealth management ... as opposed to the investment bank," Thiam told financial broadcaster CNBC.

Frequent references to Asia Pacific in its earnings release also suggested expectations of a renewed focus on wealth management there could be well founded.

Separately Credit Suisse's Asia chief said the bank would consider raising headcount or buying a smaller peer to build up its private banking business in a region where pretax profit doubled in the first half of this year.

One high-ranking Credit Suisse banker said Thiam's initial focus would be to scrutinise the bank's existing businesses which soak up considerable capital.

This would mainly be in investment banking areas like "macro" products, which include the trading of interest rate-linked products and currencies, and prime brokerage, or dealing for hedge funds.

TRACK RECORD

Credit Suisse will judge whether these areas help provide business to other units as well as looking at their cost of capital. This would come before any attempt to tap shareholders for cash, the person said.

Talking to CNBC, Thiam left the door open for a fresh cash call. "We need to look at what we need for growth, these needs are determined whether we need to call for additional capital," Thiam said.

"But I think I have a track record of generating capital and any capital that shareholders may put in they'll get back many times."

Credit Suisse bolstered its capital slightly in the second quarter to 10.3 percent of risk-weighted assets from 10 percent, but still lags behind many rivals.

"You have to show at least 11 percent not to have a discount on your share price," said Zuercher Kantonalbank analyst Andreas Brun.

For the three months to June 30, Credit Suisse said net income reached 1.1 billion Swiss francs ($1.2 billion), compared with an average forecast of 783 million in a poll of six analysts.

Credit Suisse shares were up 5 percent at 0832 GMT, well ahead of a 0.05 percent rise in the European banking sector, having earlier touched their highest since May 2014.

Despite the upbeat earnings, Credit Suisse's fixed-income securities, currencies and commodities (FICC) business was hit by investor concerns ranging from Greece's sovereign debt crisis to the timing of a long-awaited U.S. interest rate hike.

"The new strategy should address some of the pressures apparent in our second-quarter results," Thiam said in a statement.

($1 = 0.9591 Swiss francs)

(Additional reporting by Katharina Bart; Editing by Jason Neely and David Holmes)