Decentralizing its wealth management operations "has done wonders" for Credit Suisse Group AG over the past three years as it has helped the group to lower costs and speed up decision making, CEO Tidjane Thiam said Dec. 12 during the Swiss bank's investor day in London.
"The [...] economies of scale that people pursue by centralizing everything are illusory," he told analysts and investors as he explained why his bank has taken a different strategy than peers.
Credit Suisse's Swiss peer, UBS Group AG, merged its international wealth management division with its U.S.-based wealth management operations at the beginning of the year, saying it wanted to achieve better efficiency and higher return on investment.
Thiam said he does not see value in merging operations that are based in regions with completely different cultures, market dynamics, regulation and governments. "All you do is add a layer of management" and "below that supposedly global structure you will be regionalized; there is no other way to run it," he said.
Credit Suisse has the flattest management structure as compared to peers, which has accelerated decision making, and the commercial upside of keeping a regional focus has more than paid for the additional costs created by decentralizing the operations, he said.
Thiam noted that he would never sacrifice the nimbleness, commercial sense, and closeness to clients that a regionalized model provides, in order to lower costs. With that strategy over the past three years, Credit Suisse has "won in every region in our industry in wealth management in every measure," including net new assets and pretax income, the CEO said.