Hopes high for Thiam turnaround at Credit Suisse

Sun Jun 14, 2015 9:38am EDT
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By Joshua Franklin and Carolyn Cohn

ZURICH/LONDON (Reuters) - Tidjane Thiam starts work as CEO of Credit Suisse CSGN.VX next month with investors optimistic he can bring about a major change of strategy at the bank, even if he has to raise cash to do it.

An expectation that the 52-year-old will successfully switch Credit Suisse's focus to lucrative Asian wealth management and shrink its cash-intensive investment bank has propelled the Zurich-based lender's shares around 12 percent since Thiam's appointment was announced in March.

That's almost three times more than Europe's index of bank shares has progressed over the same period.

The former Prudential (PRU.L: Quote) CEO's reputation follows his success at the insurer where he expanded into Asia with a clear strategy laying out medium-term targets, and, after an early spat over a failed takeover of rival Asian-focused insurer AIA (1299.HK: Quote), built a good rapport with regulators.

But revamping Credit Suisse will be a harder task.

While rival UBS UBSG.VX scaled back its investment bank to focus on wealth management by cutting businesses like fixed income, "Credit Suisse's position is very different," Vontobel analyst Andreas Venditti pointed out.

"Of course fixed income takes up a lot of capital but actually it generates more than 20 percent of the group's revenues."

In the short-term, Thiam faces the dilemma of whether to cut resource-intensive units that are unpopular with the market or look after the bank's bottom line.   Continued...

Tidjane Thiam speaks during a Credit Suisse news conference in Zurich, March 10, 2015. REUTERS/Arnd Wiegmann