Page 2 of 2

 

Back in 2016, Varvel had told his staff that he aimed to grow the business globally in a disciplined manner and to turn it into a global leader. The jury is out on the «global leader» aspiration, but growth rates nonetheless are highly respectable.

The nine-month figures of the past three years show that assets under management increased 6 percent to 426 billion Swiss francs ($431 billion). The trend of net new money is negative, but, with new money amounting to 14 billion francs in the first three quarters of 2019, Varvel directs the star performer within IWM. Private banking only managed to attract 10.4 billion francs over the same period.

Getting More Efficient

The figures are respectable given the prevalence of low-interest rates and the structural crisis in asset management. CSAM, the abbreviation used for the business, is more efficient than many of its European rivals. The cost-income-ratio declined five basis points to 71 percent over the past three years and pretax increased 23 percent to 336 million francs over the same period – the top performance in the peer group.

The restructuring of the business has led to the non-replacement of personnel, making the overall performance more productive: the earnings per full-time-equivalent increased 7 percent over the time period.

Alternative Investment Success

Observers such as Vontobel analyst Andreas Venditti agree that CSAM has been doing rather well recently, especially in comparison with the overall trend of an industry that is suffering from the shift away from active to passive investments.

He says that the unit profited from its focus on alternative investments and niche products, helping it to escape somewhat the pressures in the industry.

Sustainable Investment Priorities

CSAM, for instance, has funds that invest in forward-looking technologies, new markets such as China or take issue with the negative interest rates prevailing in large parts of Europe. Asset management also plans to invest some 100 billion francs according to sustainable investment criteria through the end of 2020.

The digital reboot of every step along the procedural chain is an important part of the CSAM strategy. The work is progressing rapidly as was shown with the integration of the Blackrock platform Aladdin. Sources close to Credit Suisse said that the client onboarding will be fully digital by the end of next year.

The bank is also working on a new investment application that will likely be integrated into the existing online platforms for a first phase.

Private Credit Opportunities

There are further plans for the business within the bank that hasn't yet been exploited, as was made public in November. Jim Amine, the erstwhile investment banking boss, will move to the asset management unit. With a carefully selected team and a kitty worth $7 billion, Amine will invest in corporate private-market loans.

Private Credit Opportunities, the unit led by Amine, is a significant strategic opportunity for the bank. The project links up with the strategy of investing in alternative products in asset management.

A Worthy Successor?

With the departure of Amine from investment banking, Credit Suisse also announced that Varvel will assume the chair of the investment banking unit, once the most prolific among the bank’s divisions. This will make Varvel the powerbroker behind the scenes at the Paradeplatz bank. Some observers already see him as a natural successor for Thiam.

While investment banking is losing out at the bank, asset management remains on the ascent. It would still take a lot before the division obtained a similarly pivotal position as at smaller rival Vontobel and Venditti also concluded that the successes of asset management were far from sufficient to affect the overall numbers of the bank.