In order to streamline operations, Credit Suisse Group is considering selling its wealth management division in Latin America (LatAm), except Brazil. The Swiss wealth manager is making the change in order to decide which kinds of operations it will maintain, discontinue, or keep around the world after a recent restructuring.
A news agency, citing persons familiar with the situation, stated that the bank is in talks with potential buyers, including Spain’s Banco Santander and Italy’s Intesa Sanpaolo though no deal has been signed as it stands. The bank currently operates wealth management units in Mexico, Colombia, and other nations in the region, all of which may be forgone as part of the sale.
This is Credit Suisse’s second major restructuring process within the past twelve months, which comes amid moves by the bank’s new CEO Ulrich Koerner and chairman Axel Lehmann to restore trust in the institution and make it profitable, following a string of major setbacks.
The move to sell could be considered a key part of that agenda. The lender reported that its LatAm division, which includes Brazil, has a share of roughly $100 billion in customer assets and loans as of June of this year. However, its investment banking operations in Brazil are reportedly sizeable, hence its exclusion from the proposed sale package.
A Credit Suisse statement was quoted as saying: “We have said we will update on progress on our comprehensive strategy review when we announce our third-quarter earnings. It would be premature to comment on any potential outcomes before then.”
While the wealth business may experience mild changes as a result of the new strategy, structural changes at the investment bank are anticipated to be more significant. The company has been in talks with prospective buyers specifically for its securitised products group, a trading operation with, by one estimate, $75 billion in assets. The division buys and sells securities that are backed by collections of mortgages and other assets, including credit card and auto loans.
While the operation is profitable, it requires a lot of capital, and Credit Suisse once stated publicly that it was searching for third-party funding. Even though an outright sale of the operation is now on the table, the company’s executives have said they would prefer to maintain a share in it.
Some of the other restructuring moves being considered include handing dealmakers an ownership share in their division, indicating a potential spin-out. Talks have also been going on internally among executives regarding the possibility of reviving the illustrious First Boston brand, which was abandoned roughly 17 years ago.
Another plan reportedly involves the Swiss lender completely rebranding its US investment banking operations under a new name.
Rebranding, if pursued, would only further reinforce the rumours that Credit Suisse may eventually spin off or separate the investment banking division.
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