Trying to crack top tier
To crack the top tier of the US private bank market, Credit Suisse must also “leverage the mothership platform” of its Swiss parent, said Alois Pirker, research director for Boston-based Aite Group.
“Right now, Credit Suisse has more of a brokerage model and is not quite in the top tier, with true private banks like JP Morgan Chase, Citi, Bessemer and Northern Trust,” Pirker said. “But Credit Suisse is well-positioned. It has a great brand name and access to the best thinking, lending capabilities and huge operations of a leading international bank.”
The profitable European private banking model combining lending and investment management has had difficulty gaining traction in the US, according to McLaughlin. Credit Suisse, he said, is a test case for whether a “credit-led banking approach can still work in the US when most US banks, with the exception of JP Morgan, have struggled to develop any scale in their wealth management line of business.”
The integration of Credit Suisse private banking with the bank’s lending and investment banking arms is, in fact, “a strong suit,” characterized by close coordination across business lines, DeChellis said.
“We can assemble a team of experts for clients for any aspect of the bank that is both efficient and effective,” he said. The bank’s lending capabilities were a “significant portion” of the private banking business, DeChellis said. But he also made a point to note that Credit Suisse was “a conservative bank,” which did not position itself as “the most aggressive lender.”
According to a report in the Wall Street Journal last month, Credit Suisse is considering restructuring its asset management unit and combining it with private banking to save costs. Asked to comment on the report, DeChellis said the bank’s asset management unit is “currently under review.”
As for competition, DeChellis said although the bank has no stated minimum for a client’s investable assets, at least half of its current clients had at least $30 million in investable assets, and the bank was targeting prospects with at least $10 million in investable assets and net worth over $25 million.
Despite the fiercely fought battle for those clients, DeChellis said high-quality, full service advice would win the day, not competing on price. Increased downward pressure on fees “hasn’t been a big issue” for Credit Suisse Private Bank Americas, he asserted. “We are very competitive, but price becomes a bigger issue in the absence of value. Our strategy is to provide high value add in our client relationships.”