Credit Suisse buys Morgan Stanley's European wealth arm

Wed Mar 27, 2013 10:27am EDT
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By Katharina Bart

ZURICH (Reuters) - Credit Suisse CSGN.VX is buying Morgan Stanley's (MS.N: Quote) wealth management arm in Europe, the Middle East and Africa, acquiring $13 billion in assets in a move to offset exposure to more volatile investment banking.

The assets are tiny by the standards of Credit Suisse's private banking operation, the world's fifth-largest with nearly 800 billion Swiss francs ($843 billion) under management.

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

But the deal underscores Credit Suisse's efforts to beef up private banking, which tends to deliver a smoother revenue stream than investment banking.

For its part, Morgan Stanley is placing its wealth management focus on the United States, where Chief Executive James Gorman is hoping for more stable returns to compensate for the uncertain rewards from trading and 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.

Credit Suisse is also trying to slash costs at the private banking operation by 1 billion francs by 2015 and has already folded the smaller asset management arm into that unit.   Continued...

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