Credit Suisse Group AG will shrink parts of its investment bank and focus on growing in Asia and in wealth management, said its new chief executive officer. The shares surged the most in four months.
“We’re dealing with a really very well performing investment bank, but where sometimes regulation has developed in an unsupportive or unfavorable way and the pragmatic thing to do is take that into account,” Tidjane Thiam, who started as CEO this month, told analysts on a conference call Thursday. That will mean shrinking some of the division’s activities, he said, without identifying them.
Thiam, 52, formerly CEO of insurer Prudential Plc, said Switzerland’s second-biggest bank will allocate more capital to wealth management and seek to grow in Asia and developed markets such as its home country. Scaling back investment banking in favor of managing money for rich clients mirrors the approach of UBS Group AG, the bank’s larger Swiss rival.
Credit Suisse shares jumped as much as 7.3 percent, the biggest intraday gain since Thiam’s appointment was announced in March, and were trading up 6.8 percent at 28.67 francs as of 12:39 p.m. in Zurich.
As global regulators order lenders to hold more capital to absorb potential losses, the fixed-income trading departments of their investment banks have been among the most affected. Revenue from debt trading fell 13 percent to 1.24 billion francs ($1.3 billion) at Credit Suisse in the second quarter from a year before, the company said Thursday.
The private banking and wealth management unit posted a pretax profit of 1 billion francs in the period, beating analysts’ estimates, after a loss a year earlier when it was fined for helping Americans evade taxes.
“The direction of travel is clear,” said Thiam. “I’ve said I like the shape of these results. You’ve seen private banking wealth management driving forward.”
Credit Suisse’s common equity Tier 1 ratio, a key measure of financial strength, was 10.3 percent at the end of June, the lowest along with Bank of America Corp. among the seven leading investment banks that have reported data for the second quarter, figures compiled by Bloomberg Intelligence show.
Thiam said the bank will concentrate on those businesses, such as wealth management, that typically operate at well above their cost of capital. He plans to present his new strategy later this year.