Credit Suisse is to "fully integrate" Clariden Leu into its bank, achieving annual cost savings of around SFr200 million and job reductions. It also announced new leadership at Clariden Leu.
Credit Suisse is to “fully integrate” Clariden Leu into its bank, achieving annual cost savings of around SFr200 million (around $219 million) and some job reductions that are part of an intended 3 per cent staffing reduction over two years which was announced earlier this month.
The annual cost savings are part of the previously announced goal to increase private banking's contribution to the group's pre-tax income by SFr800 million by 2014, Credit Suisse said in a statement today.
As part of the changes, Hans Ulrich Meister, chief executive for private banking at Credit Suisse, has been appointed chairman of Clariden Leu’s board of directors. He succeeds Peter Eckert in the role.
Hanspeter Kurzmeyer has been named as its new chief executive and made head of the integration project which is expected to be completed by the end of 2012. Kurzmeyer has held various important positions at Credit Suisse for over 30 years and was, until recently, head of private clients for Switzerland.
Olivier Jaquet has decided to step down as CEO of Clariden Leu Group.
Analysts at Vontobel welcomed the changes. "We believe an integration of Clariden Leu makes sense. We already included a SFr400 million benefit into our 2013 financial year private bank estimates as well as an overall 1,500 headcount reduction over the next two years; we do not intend to change our estimates. The bank has a "hold" recommendation on Credit Suisse.
The changes are a sign that Swiss private banking is undergoing a period of consolidation in the face of margin pressures brought about by rising regulatory costs, the high value of the Swiss franc and low interest rates. In recent weeks, there has been widespread speculation that Julius Baer, for example, will bid for the Netherlands-based Rabobank’s controlling share stake in Sarasin, another Swiss bank.
The changes come a few days after both banks announced they had started to inform clients suspected of evading US taxes that they had started to transfer some client account details to the US authorities.
"Private banking is crucial to the success of Credit Suisse. In view of the fundamental changes in the industry, we are currently determining which areas to prioritise for growth and investment, and we are focused on further increasing the profitability and efficiency of our private banking business,” said Urs Rohner, chairman of the board of directors of Credit Suisse.
“Based on our analysis, we are convinced that combining Clariden Leu with Credit Suisse represents the best long-term option to create value for clients, shareholders and employees,” Rohner said.