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Suisse opens pockets to super-rich loan seekers

The logo of Swiss bank Credit Suisse is seen below the Swiss national flag at a building in the Federal Square in Bern, Switzerland, May 15, 2014. REUTERS/Ruben Sprich/File Photo

 

Bloomberg

Demand from the wealthy for loans is so strong that Credit Suisse Group AG can’t keep up, according to its international wealth chief, Iqbal Khan.
“We couldn’t execute all the demand we had” in the first quarter, Khan said in an interview at the company’s headquarters in Zurich. “We have a very material lending in pipeline.”
The Swiss bank is betting that it can attract wealthy customers by offering individual clients loans in the hundreds of millions of dollars as it pivots from investment banking to wealth management. Under a strategy designed by Chief Executive Officer Tidjane Thiam after he took the job in July, the bank wants to focus on services for entrepreneurs and personal fortunes as it vies with competitors such as UBS Group AG and JPMorgan Chase & Co. to advise ultra-wealthy families. Promoted to run Credit Suisse’s international wealth-management unit in October, Khan, 40, said he’s building internal resources to meet credit demands in the regions he oversees, which include western Europe, Russia, the Middle East and Latin America.
Thiam has tasked him with almost doubling lending volume to 56 billion Swiss francs ($58 billion) by 2018.
Net interest income from private banking loans and deposits at the unit increased 37 percent to 301 million francs in the first quarter from a year earlier, the company reported this week. Khan said margins widened in the first three months, while the results show net loans were unchanged at 38.9 billion francs from the fourth quarter.
“On the one side you have clients with lending demand, and on the other side, you have clients who are deleveraging,” Khan said. The slowdown in China and a further drop in oil prices roiled markets at the start of the year, scaring off many wealthy investors and exposing others to losses.
Political uncertainty often appears to be a stimulus for increased credit requests as investors look to re-balance their positions, according to Seb Dovey, managing partner at Scorpio Partnership, a wealth consultancy based in London.
The upcoming UK referendum on the European Union and the US elections may be on wealthy clients’ minds, he said. To ensure Credit Suisse’s lending drive won’t crimp profitability, Khan has set an internal target for the minimum
return on capital for lending.
, which he declined to disclose. Return on regulatory capital at the unit fell to 23.4 percent in the first quarter from 23.7 percent a year earlier, according to a company filing.

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