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Tidjane Thiam Photographer: Simon Dawson/Bloomberg(bloomberg)
(Bloomberg) -- Credit Suisse Group AG’s Chief Executive Officer Tidjane Thiam said that the bank won’t further cut back its Global Markets business after the unit posted a surprise loss.
There’s a critical mass to the size of investment banking below which “you are not credible, good people will simply not come to work for you," Thiam said in response to questions at a conference in Zurich late Wednesday.
Scaling down trading in New York and London has been a key concern during Thiam’s first three years at Credit Suisse. He wants to focus on wealth management and emerging markets while using the investment bank to serve the ultra rich.
“We made 1.5 billion of profits in Swiss francs in wealth management and global markets has a 22 million loss,” Thiam said. “We spent the whole call discussing the global markets loss," he said.
Credit Suisse’s posted higher pretax profit for its private-banking divisions in the third quarter, while adding assets.
Credit Suisse’s global markets and investment banking business has the right size to serve its private banking clients and cannot be further reduced in size if it wants to stay relevant, Thiam added.
Credit Suisse has two businesses in investment banking -- a securities unit and an advisory business. Global Markets, led by Brian Chin, has been shrinking since 2015 through the exits of businesses such as distressed debt trading.
Thiam capped capital allocation to the division that trades equities and credit catering to asset managers and Hedge Funds. Overall, revenue and the unit’s profit contribution has declined over the past three years, though it still accounts for a quarter of the bank’s total revenue. Thiam said recently that Global Markets won’t have an impact on the bank’s return on capital targets for next year.
The markets loss for me “was a good outcome,” Thiam said. “When I arrived in 2015 it was 2.4 billion. So I was sitting there pretty happy with my 21 million loss,” he said.
(Adds background about Global Markets, Thiam comments.)
--With assistance from Catherine Bosley.
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