By Cristina Roca
Credit Suisse Group AG said Thursday that it will exit its prime brokerage activities and shift focus from its investment bank to its wealth-management business, as its new chairman seeks to dial down the company's exposure to risk as part of a new strategy.
The Swiss lender said it will exit Prime Services, with some exceptions, over this year and next. It will reduce capital at its investment bank by more than $3 billion.
The strategy comes after the double blow of the collapses of Archegos Capital Management and Greensill Capital earlier this year, which cost the bank several billions of dollars, forced the departure of its former investment-banking chief and chief risk officer, and left it scrambling to shore up the way it manages risk.
Credit Suisse said it will pour about 3 billion Swiss francs ($3.29 billion) of capital into its wealth-management division by 2024. It will hire about 500 new relationship managers and step up technology investments as it targets assets under management of about CHF1.1 trillion and incremental recurring revenues of more than CHF1 billion by 2024.
At group level, the bank said it targets return on tangible equity of more than 10% by 2024. For 2022, it targets a net income distribution of about 25%.
Credit Suisse said it will reorganize its structure to unify its activities across different regions. Starting in January, it will have just four divisions, grouping all its investment-banking, wealth-management and asset-management businesses under one unit each, with the fourth division being its Swiss bank.
The lender will make investments that will increase from 2022 to 2024 to about CHF1 billion-CHF1.5 billion a year in all four divisions, it said.
The bank on Thursday posted a net profit for the third quarter of CHF434 million, down from CHF546 million a year earlier but above a CHF308 million median of analyst estimates provided by the company, as it released provisions it had booked for soured loans.
Revenue was CHF5.44 billion, up 5%. Analysts had expected revenue at CHF5.09 billion, according to the same company-provided estimate.
Write to Cristina Roca at cristina.roca@wsj.com
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