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Financial Times reporters James Shotter in Zurich and Daniel Schäfer in London have unveiled that the Swiss giant Credit Suisse plans to shrink its unit serving hedge funds amid pressure from investors to reduce the leverage of its investment banking division.
The goal is to bring down the capital usage of its balance sheet-intensive prime brokerage as part of a plan announced in October to cut leverage by about CHF 70bn ($71.5bn), two people close to the situation said.
The Financial Times article states that investor’s are getting restless amid attempts at reallocating capital from its investment banking arm to its private banking unit. These concerns are shared by at least one member of the non-executive board.
Brady Dougan, chief executive of the Zurich-based bank since 2007, 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.
“We don’t think it is the right mix,” one top-30 investor said. “Fifty fifty is still a long way off and I would wish that they would cut back the investment bank even more than that.”
Moreover, its being reported that Credit Suisse is considering a stronger push towards electronic channels in its “global macro” unit, which includes government bond and forex trading, according to people familiar with the plans.
To see the full article on The Financial Times website, click here.