Credit Suisse Group AG's asset management business will be split from its wealth management unit as the Swiss bank grapples with the fallout of its exposure to Greensill Capital (UK) Ltd. The asset management operations, which contributed 22% of wealth management's total revenues in 2020, could be carved out from the rest of the group, according to CEO Thomas Gottstein.
Switzerland's second-largest lender by assets is entangled in both the Greensill saga and the Archegos Capital sell-off, though the latter is reportedly contained at the bank's New York prime brokerage unit and does not extend to International Wealth Management, or IWM.
IWM consists of asset management and private banking, and the decision to revamp its structure comes after Credit Suisse wound down $10 billion in assets in supply-chain funds related to Greensill. Billions of dollars have been returned to investors but Credit Suisse executives reportedly estimate that clients stand to lose up to $3 billion.
Gottstein said recently that he had "some doubts" about having asset management as a sub-division of IWM.
IWM contributed more than 21% to the Credit Suisse group's operating income in 2020, according to S&P Global Market Intelligence data, and in a March trading update it said the unit's first two months of 2021 were the best in a decade.
The asset management business accounted for CHF1.09 billion of the unit's CHF4.84 billion revenues in 2020. IWM yielded an adjusted pretax income of CHF1.10 billion, down from CHF2.01 billion in 2019. The bank posted a loss from the asset management business in 2020, primarily due to a CHF414 million impairment loss related to the valuation of its non-controlling interest in U.S.-based York Capital Management, an amount booked in the fourth quarter.
Gottstein recently told Bloomberg News that the Greensill debacle was primarily an asset-management problem and said the bank was still "on the right path."