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November 12, 2020

Credit Suisse eyes acquisition opportunities in wealth management

Swiss banking group Credit Suisse is reportedly open to merger and acquisition (M&A) opportunities, especially in its wealth management business.

The bank’s CEO Thomas Gottstein spoke at Bloomberg’s Future of Finance virtual event that consolidation “is needed and will happen”.

The European banking industry is under pressure amid negative interest rates and a surplus of banks in the continent is leading to consolidation, noted Gottstein.

Credit Suisse is particularly eyeing private banking opportunities, he stated.

In September, Swiss finance blog Inside Paradeplatz reported that the management of Credit Suisse and UBS are weighing a merger of their businesses.

Later that month, Bloomberg reported that UBS chairman Axel Weber has prepared a wish list of possible partners for a potential merger, which includes names such as Deutsche Bank, BNP Paribas, and Credit Suisse.

The report also said that Weber considers a deal with Deutsche Bank among the most favoured scenarios.

However, acquisitions are not the only way the bank’s wants to grow, according to the latest Bloomberg report. It is also focused on organic growth.

In its key growth market of China, the bank is looking to grow through expansion of relationship manager headcount.

However, Gottstein does not present a positive outlook for the year head and believes that the coming year will be “tense” due to the impact of Covid-19. He said that a second lockdown in Europe will have wide implications for the wealth management sector and the economy as a whole.

He stated: “There’s no question 2021 we will see further fallout.

“And we will see some more corporates that will need liquidity and lending support.”

The bank is now emphasising on the growth of the loan book and deals with the wealthy and most entrepreneurial clients.

In Q3 2020, Credit Suisse reported a 38% slump in net profit, missing analyst expectations, due to wealth management slowdown.

Pre-tax income dropped at its Swiss Universal Bank, International Wealth Management, and Asia Pacific divisions.

Recently, Swiss private bank Julius Baer too said that it is considering new acquisitions as it expects that the restrictions imposed on the bank will be withdrawn next year.

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