Credit Suisse is chasing ambitious goals in Switzerland. Now, the bank's Swiss boss, Thomas Gottstein, is exhorting his troops near the finishing line, according to a memorandum seen by finews.com.
If Thomas Gottstein can replicate his success in the first three months at Credit Suisse's Swiss unit in the next three quarters, he will have successfully crossed the finishing line.
Gottstein, a long-standing investment banker who moved to the Swiss unit three years ago, is more vulnerable than any other of the 11-person top management around CEO Tidjane Thiam.
The Swiss banker on Wednesday issued a rallying cry to employees, saying «It is decisive for our continued success that you exploit all the possibilities for compliant and sustainable revenue growth», he told the Swiss bank's domestic staff in a memo seen by finews.com.
100 Million Sfr Short?
The Swiss bank recorded 554 million Swiss francs ($566 million) in profit before tax in the first quarter, which would translate to 2.2 billion francs if Gottstein can maintain the healthy early-year momentum. This is just shy of the 2.3 billion franc goal set out in 2015, but Thiam signaled on Wednesday that he won't quibble with a stray 100 million francs – the unit's performance is strong, he said.
Thiam, who originally wanted to list a stake in the Swiss bank to raise valuable capital, gave the 53-year-old Gottstein the most ambitious of restructuring targets of all of Credit Suisse's units: the Swiss bank was to lift its pretax profit to at least 2.3 billion francs, from 1.6 billion francs before the overhaul.
Slashing Spending
Credit Suisse clearly is prepared to do whatever it takes to squeeze more juice out of Switzerland. The only problem? The alpine nation's banking market simply doesn't have the growth rate to underpin the goals. Gottstein banked on an «entrepreneur's bank» strategy in order to win more revenue off of existing clients.
In reality, the first thing he and his deputies did was to slash spending – and cut jobs in high-cost Switzerland. The first quarter underscores this: revenue growth is a modest 3 percent, while spending was lowered by double that, thanks to the ongoing job layoffs. By year-end, Credit Suisse wants to have removed 300 jobs from Switzerland.
Tenure in Question?
No wonder, then, that Gottstein has been increasingly irascible when asked about Credit Suisse's Swiss unit targets. Last year's 1.9 billion francs was far off the 2018 goal, and gave rise to a choir of pessimists who said Gottstein would miss the target.
Now, the passionate golfer is on the home stretch, judging by the healthy first-quarter reading – and Gottstein is exhorting staff to keep up the momentum. Along with the appeal to run after every potential franc of revenue, he also warned staff that «cost discipline remains a key issue».
Gottstein can clearly see the end zone, reminding staff that the Swiss bank «is now in the second quarter of the last year of our restructuring plan». Appealing to staff to keep up the team spirit through the year, Gottstein isn't looking much further than December 31.
