Credit Suisse to Merge Investment Banking, Trading Divisions

The bank is expected to officially announce the merger tomorrow.

The Credit Suisse Group is expected to announce the merger of its investment banking unit and capital markets unit and also its risk and compliance units, thus reversing the splits made five years ago.

Reported by The Straits Times on Wednesday, Thomas Gottstein, the chief executive of the Group, is seeking to tighten his control and thus boost the performance of the investment bank. The bank is likely to make the official announcement on Thursday when the quarterly results will be publicized.

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Notably, the investment banking unit of the bank was posting losses for the past few quarters, and the merger might increase profitability. This can also be seen as a reputational overhaul following the scandals associated with the company.

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“Our strategy works,” the Switzerland-headquartered bank said in a statement. “We are a leading, global wealth manager with strong investment banking capabilities. On an ongoing basis, we consider a broad range of options to identify ways to further improve how we serve our clients and achieve our strategic goals in a compliant, profitable way. We are in a constant dialogue on these topics with our investors.”

A long-pending merger proposal

Gottstein took charge of the investment bank in February and since then considering a merger of its units. In the investment banking sector, however, many companies contradict such mergers. Goldman Sachs runs its investment banking and capital markets unit separately while Morgan Stanley CEO oversees both.

Credit Suisse restructuring is also said to be a win-win move for the capital markets division and its head Brian Chin, who turned the poor performing unit to the bank’s one of the key profit contributor.

Meanwhile, the bank is also focusing on its Chinese business and recently became the majority stakeholder in its Chinese joint venture. It also made a couple of senior appointments at the Chinese division.

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