Zurich-headquartered Credit Suisse is considering centralizing its management and replacing its present regional structure in an effort to cut operational costs, Reuters reported on Wednesday, citing three anonymous sources.
The report outlined that the investment bank executives are considering folding the private banking and other money managing divisions into one global division, controlled from the Swiss offices. The management of the Swiss banking giant is likely to decide on the proposal by October, which was floated in the recently held annual strategy meeting in the mountain town of Bad Ragaz.
Credit Suisse promoted its regional structure in 2015 and since then has gained a ton of wealthy clients. The restructuring would directly impact the wealth managers in Asia and internationally who deal with clients with tens of millions of dollars.
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Losses and Scandals
The Swiss bank is struggling for a while with mounting losses and scandals. The centralization proposal gained momentum with concerns of losing investors and the possibility of a foreign takeover with plummeting marketing capitalization.
Credit Swiss’ losses deepened with its strong business ties with Archegos and collapsed supply chain finance firm Greensill Capital. The bank reported a loss of $251 million for the first quarter of 2021, Finance Magnates reported earlier.
Though the bank did not confirm anything on the possible step, one of the sources said that the wealth management unit could either be combined with Asia-Pacific and International Wealth Management divisions, or there could be a further fold in the bank’s private banking business for ultra-wealthy customers.
Earlier, reports suggested that Credit Suisse is considering a merger with its domestic competitor UBS and the two banks already started talks. However, UBS Chairman, Axel Weber confirmed that such a deal could not be materialized in the near future.