After losing billions of dollars, Credit Suisse Group AG is rethinking its long-term plans for its business in mainland China. This is part of a larger strategy change.
Top bankers, including the new CEO Ulrich Koerner and the head of the Asia-Pacific region, Edwin Low, will get together in Singapore next week to talk about, among other things, how they see the China business. People who didn't want to be named because the talks are private said that senior executives at Credit Suisse aren't sure if it's worth it to expand its securities business and wealth management in the country.
Credit Suisse's plans to scale back in the world's second-largest economy would be a big change, coming just two years after it was given permission to take control of its local business as part of Beijing's much-touted opening to financial firms from outside the country. Senior executives have left its securities business, which is a sign of the company's bigger problems. This has slowed down regulatory approval, which would have made it possible to build up equity trading and wealth offerings.
People say that the company's top leaders are going to think about whether or not they should cut their business in China, even though they have hired new staff and spent a lot of money there. One of the people said that Asia managers are trying to convince executives in Zurich that China is still a good place to invest. The talks are part of the company's second firm-wide strategy review in as many years. The results of the review will be shown along with earnings for the third quarter. After a string of losses, the bank is also going to cut back on the investment bank.
“Asia Pacific is an important growth market for Credit Suisse and we are committed to investing in the region,” a spokesperson for Credit Suisse said. “This includes China where we remain committed to our long term ambitions. As part of our strategy, we continue to invest in our China footprint, including our immediate focus of taking full ownership of our securities joint venture, as we have stated previously. We will update on progress of our comprehensive strategic review when we announce our third quarter earnings, but any reporting on potential outcomes before that is purely speculative.”
China's securities regulator told the bank that it needs to fix the high staff turnover before it can start its new business there. In the past few months, Credit Suisse has lost almost half of the top managers at its China securities businesses. These people include Chief Financial Officer Annie Qiu, Compliance Head Xu Yang, and Chief Information Officer Larry Tung.
In November, the bank's previous strategy review included a strong "pivot to APAC," which showed that the bank wanted to go after wealthy clients in mainland China, Hong Kong, and Singapore. Aspiring top-tier global wealth managers don't have much of a choice but to focus on Asia, where the market for serving new billionaires is still young. Most companies have focused on the financial hubs, but Credit Suisse has big plans for the mainland. For example, it wants to start a bank that is based in the mainland. This would give it the branch network it needs to grow its wealth business.
Global banks are rethinking their future in China because of a wave of tighter regulations, growing tensions with the US, and the effects of a strict Covid-zero policy. Other companies, like JPMorgan Chase & Co. and UBS Group AG, have also recently moved around their top executives in China.
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