Credit Suisse Rethinks What Makes a Dream Client After Crises
Credit Suisse Rethinks What Makes a Dream Client After Crises
(Bloomberg) -- As Credit Suisse Group AG reins in risk, it may be reconsidering what it’s looking for in an ideal client.
The Swiss firm, which has been courting wealthy entrepreneurs in Asia, cut ties with some customers in that region last quarter, leading to the loss of $4.2 billion of client assets. The move followed the bank’s pledge of a thorough risk review of all its divisions after a pair of blowups in recent months, as well as last year’s losses tied to a wealth client in Asia.
“The outflows were linked to situations where we wanted to exit clients either for risk or other reasons,” Chief Executive Officer Thomas Gottstein said on a call with analysts for the bank’s second-quarter earnings. He declined to give further details on who the “small number of clients” were, but said it was a one-time move.
The bank was burned last year by its exposure to billionaire Lu Zhengyao, who former CEO Tidjane Thiam once described as representing Credit Suisse’s dream client. In early 2020, Zhengyao’s Luckin Coffee Ltd defaulted on loans as an accounting scandal was discovered.
The bank has already cut exposure to some hedge funds in its investment bank and ended ties with Masayoshi Son’s SoftBank Group Corp. after the role it played as a backer of Greensill Capital. Still, Gottstein said recent volatility in Chinese markets tied to regulatory crackdowns won’t deter the bank’s growth plans in Asia.
While recent events contribute to “a less predictable short-term situation,” the firm sees “very strong and robust economic development not only in China, but in Asia, that we consider to be very attractive for our business models,” Gottstein told reporters.
Chief Financial Officer David Mathers said that some of the additional outflows in Asia -- which totaled $6.7 billion -- were likely to have been clients reacting to the twin scandals in the first half of the year. Credit Suisse also cited a more cautious approach to lending during the second quarter, whereby some customers might have asked for loans and were refused.
The outflows may raise questions about the bank’s potential growth. In December, the firm said Asia-Pacific would represent the fastest-growing region for its wealth management business, with targets of double-digit percentage increases for business volume and lending.
“The APAC region is absolutely core to the Credit Suisse strategy,” Gottstein said Thursday.
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