Credit Suisse Group AG (Credit Suisse) announced a series of decisive actions to create a simpler, more focused, and more stable bank built around client needs. The announcement follows a strategic review conducted by the Board of Directors and Executive Board, resulting in a radical restructuring of the Investment Bank, an accelerated cost transformation, and strengthened and reallocated capital, all of which are designed to create a new Credit Suisse. The bank will build on its leading Wealth Management and Swiss Bank franchises, with strong product capabilities in Asset Management and Markets.
Earlier in October’s first week, Chief Executive Officer Ulrich Koerner reassured staff that the bank has a “strong capital base and liquidity position” and told employees that he will be sending them a regular update until the firm announces a new strategic plan on October 27.
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As per the new action plan, over the next three years, Credit Suisse expects to:
1. Radically restructure the Investment Bank to significantly reduce Risk Weighted Assets (RWAs) with:
- A highly connected Markets business and industry-leading Investor Products franchise
- CS First Boston as an independent Capital Markets and Advisory bank
- Capital release from exits and significant exposure reduction for Securitized Products
- Reduced RWAs and Leverage Exposure, each expected to decrease by nearly 40%
2. Accelerate cost reductions by reducing the Group’s cost base by 15%, or CHF nearly 2.5 billion, to CHF nearly 14.5 billion in 2025
3. Progress on framework and exclusivity agreement announced today to transfer a significant portion of the Securitized Products Group (SPG) to investor group led by Apollo Global Management
4. Strengthen the CET1 ratio through Securitized Products transaction and other divestments
5. Create a Non-Core Unit (NCU) to accelerate the run-down of non-strategic, low-return businesses and markets, to release capital
6. Allocate almost 80% of capital to Wealth Management, Swiss Bank, Asset Management and Markets by 2025
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Axel P. Lehmann, Chairman of the Board of Directors of Credit Suisse, said: “Over 166 years, Credit Suisse has built a powerful and respected franchise but we recognize that in recent years we have become unfocused.
For a number of months, the Board of Directors along with the Executive Board has been assessing our future direction and, in doing so, we believe we have left no stone unturned.
Today we are announcing the result of that process – a radical strategy and a clear execution plan to create a stronger, more resilient and more efficient bank with a firm foundation, focused on our clients and their needs.
At the same time, we will remain absolutely focused on driving our cultural transformation, while working on further improving our risk management and control processes across the entire bank.
I am convinced that this is the blueprint for success, helping rebuild trust and pride in the new Credit Suisse while realizing the value and creating sustainable returns for our shareholders.”
Credit Suisse will follow a clear execution roadmap with the announced restructuring of the Investment Bank, strengthened capital levels, and accelerated cost transformation. The bank is expected to deliver sustainable and attractive returns from 2025 onwards.
