Credit Suisse buys Morgan Stanley's European wealth management arm

Wed Mar 27, 2013 5:54am EDT
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ZURICH (Reuters) - Credit Suisse CSGN.VX will buy Morgan Stanley's (MS.N: Quote) wealth management arm in Europe, the Middle East and Africa with $13 billion in assets, as it seeks to offset its exposure to more volatile investment banking.

The assets being acquired are tiny for Credit Suisse's private bank, which has the world's fifth-largest private banking operation, managing 798.5 billion Swiss francs ($841.90 billion) on behalf of wealthy clients.

"Credit Suisse sees more daily fluctuation of their assets under management due to market movements and foreign currency swings than this deal size," said Venditti, who has a "market weight" rating on Credit Suisse stock.

But the deal underscores an effort to beef up its private banking operation, which tends to bring a smoother stream of revenue than investment banking.

Details of the deal - one of Credit Suisse's first notable acquisitions since it bought out the remainder of Brazilian investment fund Hedging-Griffo in 2011 - were not disclosed. It said it expected to complete the purchase later this year.

Hometown rival UBS UBSN.VX has also focused on private banking, but began reducing its exposure to fixed-income investment banking dramatically last October.

While beefing up the private banking business, Credit Suisse is also trying to slash its costs by 1 billion Swiss francs by 2015. As part of that effort, the private bank swallowed the group's smaller asset management arm in November.

In 2011, Credit Suisse said it would integrate Clariden Leu, a private bank that it had owned but allowed to operate independently.

Credit Suisse has argued that the integration was a success, but some clients have withdrawn funds.   Continued...

The logo of Swiss bank Credit Suisse is seen on a building at Paradeplatz square in Zurich, February 13, 2013. REUTERS/Michael Buholzer