Credit Suisse CEO defends ‘markets unit’ after miss

Bloomberg

Credit Suisse Group AG global markets unit failed to keep pace with trading gains at Wall Street rivals, prompting CEO Tidjane Thiam to defend the underperforming business.
Net revenue at global markets fell 6 percent in the second quarter from a year earlier after declines in fixed income sales and trading and equities. Overall trading revenue at Zurich-based Credit Suisse — which also includes the bank’s Asia Pacific markets business — gained about 3 percent, compared with trading gains of about 10 percent at US banks.
Thiam said that the bank needs to better explain its strategy for global markets, arguing that it wouldn’t chase revenue because of strict capital requirements at the business and that it shouldn’t be compared to more aggressive rivals. He also said global markets helps drive earnings at others units, though at a press conference declined to provide figures on its contribution.
“The strategy is not to maximise standalone Global Markets revenue but to use it to power the other divisions,” Thiam said. “It generated a lot of activity in international wealth management and the Swiss universal bank that would not be there without GM. That hidden contribution is embedded in the outperformance of SUB.”
Global markets was the only division which failed to meet estimates or do better than expected in the second quarter, according to Kian Abouhossein, an analyst at JPMorgan Chase & Co. The business continues to disappoint, Vontobel analyst Andreas Venditti said, after the bank’s overall profit beat estimates.
The CEO is boosting collaboration between the firm’s wealth units and pared-down trading businesses. He’s also putting deal-makers alongside private bankers in client meetings with the aim of devising financing ideas for their companies, as well as topics such as their personal wealth and succession plans.
Credit Suisse’s Global Markets business, led by Brian Chin, has steadily become less important since the overhaul started as Thiam sought to lower the bank’s reliance on volatile trading activities.