Zurich, November 4, 2021– Credit Suisse announces its Group strategy with a clear focus on strengthening and simplifying its integrated model and investing in sustainable growth, while placing risk management at the very core of the bank.
Following a comprehensive assessment of its strategy, the Credit Suisse Group Board of Directors (BoD) has unanimously agreed on a long-term strategic direction for the Group. The strategy is based on a long-term vision and reemphasizes the integrated model, with a well-defined three-year plan, investing in sustainable growth across Credit Suisse’s businesses, while placing risk management and
a culture that reinforces the importance of accountability and responsibility at its core. It has also approved the introduction of a global business and regional structure to align the organization with the strategy review and to reinforce cross-divisional collaboration and management oversight.
Work in this direction has already begun as we strengthened our risk management and capitalization, and de-risked the bank while increasing the investment in our core businesses.
Over the next three years, the bank aims to drive sustainable growth and economic profit driven by three key pillars:
- Strengthening its core by deploying CHF ~3 billion of capital to the Wealth Management division by 2024 and increasing the ratio of capital allocated to Wealth Management, the Swiss Bank and Asset Management versus the Investment Bank from ~1.5x in 2020 to ~2.0x in 2022.
- Simplifying its operating model with a clear matrix organization of global businesses and regions, and a unified, global Wealth Management division, a global Investment Bank, and a central Technology and Operations function, which, together with other measures, is expected to generate structural cost savings to invest for growth.
- Investing for growth with incremental investments progressively increasing from 2022 to 2024 to approximately CHF 1 – 1.5 billion p.a. in all four divisions, namely in our leading global Wealth Management business; global Investment Bank focused on advisory and solutions; leading Swiss universal banking franchise; as well as multi-specialist Asset Manager.
António Horta-Osório, Chairman of the Board of Directors, said: “Over the past months, the Board of Directors and the Executive Board have been working together relentlessly on shaping the strategy that will serve as our compass going forward. The measures announced today provide the framework for a much stronger, more client-centric bank with leading businesses and regional franchises. Risk management will be at the core of our actions, helping to foster a culture that reinforces the importance of accountability and responsibility. We will invest to grow our topline by shifting approximately CHF 3 billion of capital to our wealth management business and through additional technology and other investments amounting to around CHF 1 to 1.5 billion per year by 2024, funded by expected BAU cost savings. This should enable us to achieve sustainable growth together with substantially lower risk and to deliver lasting value for all our key stakeholders – clients, investors, colleagues and society. With our 165-year heritage of superior client service and integrated approach, Credit Suisse is well positioned to build on the strengths of its great people and operating businesses.”
Thomas Gottstein, Group CEO, said: “With this strategic review, we have determined a clear and compelling way forward, building on existing strengths and accelerating growth in key strategic business areas. We will become a more streamlined bank, with expected lower volatility of earnings and with a sharper focus on the markets we operate in. We have the ambition to further strengthen our position as a global leader in wealth management and we will make further investments in areas where we have competitive advantages within our more focused and more capital-light Investment Bank, our leading and client-centric bank in Switzerland as well as our multi-specialist Asset Manager. I am confident that with the measures we announced today, we will be better positioned to leverage our strengths, control our risks and further build connectivity with the Wealth Management division, bringing the whole of our bank to all our private, corporate and institutional clients around the world.”
Starting from January 2022, the Group will be reorganized into four divisions – Wealth Management, Investment Bank, Swiss Bank and Asset Management — and four geographic regions – Switzerland, Europe, Middle East and Africa (EMEA), Asia-Pacific (APAC) and Americas — reinforcing the integrated model with global businesses and strong regional client and regulatory accountability. The new leadership structure will be announced nearer to the implementation date.
The Group is making clear choices across all four divisions to strengthen the bank and accelerate growth:
The globally unified Wealth Management division is expected to accelerate growth with an increase of about 25% in allocated capital by 2024, while aligning client segmentation, product offerings, platforms and technology, and leveraging global capabilities through a bestin-class integrated model across all regions. The division plans to expand its market leading UHNW and Upper HNW franchises and accelerate Core HNW growth in selected scale markets. We plan to exit approximately 10 non-core markets. The division expects to hire approximately 500 Relationship Managers over the next three years, which represents an increase of about 15% from 2021 to 2024. Investments in technology are expected to increase by approximately 60% in 2024 versus 2021. It has an objective of approximately CHF 1.1 trillion in assets under management by 2024, an increase of CHF 200 billion from current levels. This growth strategy is expected to deliver incremental recurring revenues of at least CHF 1 billion by 2024 combined with growth in transaction-based revenues. The 2024 ambition is to exceed a return on regulatory capital of 18% on an adjusted basis, excluding significant items, and grow net new assets by a mid-single digit p.a.
The Investment Bank creates a single global franchise across all four regions by integrating APAC and Swiss IBCM (Investment Banking & Capital Markets) with the existing Investment Bank. It intends to further pivot to capital-light Capital Markets & Advisory businesses, and continue to leverage its market-leading Credit, Securitized Products & Leverage Finance businesses, while further growing Global Trading Solutions (GTS) connectivity with Wealth Management. The division plans to exit Prime Services (with the exception of Index Access and APAC Delta One), optimize the Corporate Banking exposure and reduce the longduration structured derivatives book, while exiting approximately 10 non-core GTS markets without Wealth Management nexus, helping drive an expected capital reduction of about 25% from 2020 levels by 2022. This will enable the investment banking businesses to be an even stronger strategic partner to the bank’s core corporate, entrepreneurial, UHNW, institutional and financial sponsor clients. With these measures, a return on regulatory capital of over 12% on an adjusted basis excluding significant items, is being pursued for 2024.
The Swiss Bank will include the domestic retail, corporate and institutional client segments as a business. The Swiss Bank will also continue to invest in further growth and build its leading position, by bringing the fully integrated services of the bank to its clients together with the global business divisions. Our 2024 ambition is to exceed a return on regulatory capital of 12% on an adjusted basis excluding significant items and grow client business volumes at low- to mid-single digit over 2022 to 2024.
In Asset Management, the focus will be on investing in core product capabilities, on expanding distribution in select European and APAC markets, and building a strong connectivity to our Wealth Management division. The division plans to exit non-core
investments & partnerships, which is expected to result in an approximate 40% RWA reduction in investments & partnerships over 2021-2022. Our 2024 ambition is to exceed a return on regulatory capital of 45% on an adjusted basis excluding significant items and net new asset growth of over 4% p.a.
The global divisions will be complemented by four strong regions namely, Switzerland, EMEA, APAC and Americas, to drive cross-divisional collaboration and strengthen legal entity management oversight and regulatory relationships at a regionally-aligned level.
In the APAC region, the bank has a unique opportunity to capture growth from our leading position there. This includes investing in its Mainland China franchise, centered around the Bank for Entrepreneurs model, building on our leading Singapore and Hong Kong hubs and further leveraging investment, financing, advisory and capital markets solutions.
In connection with the reorganization, we expect operating expenses to be impacted by approximately CHF 400 million of restructuring expenses relating to business exits, compensation normalization and Archegos remediation activities between the fourth quarter 2021 and 2022. As the implementation of the reorganization progresses, restructuring costs relating to asset impairments and liability valuations may arise in connection with business activities we are planning to exit and their related infrastructure.
Our Sustainability, Research & Investment Solutions function will continue to lead the bank and our clients into a sustainable future. The bank will build on its provision of sustainable investment solutions to clients through its distinctive ESG product offering, partnering with corporate clients to finance their sustainable transition through innovative and collaborative solutions and publish high-impact research and thought-leadership content. It will also continue to adapt its culture and governance to reflect sustainability across its franchise, with a focus on diversity and inclusion.
In addition, the bank’s corporate functions will continue to partner with the divisions and regions, providing effective collaboration, management and control oversight. The simplification of the business model and IT infrastructure is key to improving effectiveness as well as to defining clear accountability and ownership. Credit Suisse is centralizing IT and Operations under the new Chief Technology and Operations Officer. Furthermore, centralized teams covering procurement and enterprise architecture have been established under the Chief Financial Officer to drive the overall cost management program.
The Group has clear financial goals for each of the new divisions for 2022 to 2024 and will deliver on its strategy with disciplined and relentless execution.