Swiss banking giant Credit Suisse is reportedly planning to trim down its prime brokerage unit serving hedge funds following pressure from investors to mitigate risk at its investment banking division.
The bank is also seeking ways to reduce the capital usage of its balance sheet-intensive prime brokerage as part of its October plan to cut leverage by about $71.5bn, reported Financial Times.
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Credit Suisse’s prime brokerage unit is considered to be the lower returning parts of the investment bank due to its high use of balance sheets.
Additionally, the bank is planning to increase the prices it charges hedge funds for services.
The move follows investors concerns over the bank’s failure to cut leverage and reallocate capital from its investment banking arm to its private banking unit.
Brady Dougan, chief executive of the Zurich-based bank said last year that he wanted to balance Credit Suisse’s investment bank more evenly with the private banking unit, and aims to allocate roughly half the bank’s capital to each.
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By GlobalDataAccording to the report, the bank’s ability to boost its private banking business rapidly is limited, and advised that it is hard to shrink the investment bank further without damaging its profitability.
Furthermore, Credit Suisse is considering a further push towards electronic channels in its global macro unit, which includes government bond and forex trading.
