58 Finance & economics The EconomistAugust 24th 2019
2 especially the very rich indeed. The trading
platform would still be needed, but at a size
to serve those clients.
He borrows a parallel from his former
trade. Insurers prefer policies with repeat-
ed premiums to one-offs. Revenues from
managing the assets of the wealthy, Mr
Thiam says, recur like the former, because
once clients place money with you, then, if
you look after them, they tend to stay; trad-
ing revenues come and go like single pre-
miums. Net new assets in wealth manage-
ment in all territories have been growing at
about 5% a year, and profits at 15%.
Mr Thiam’s aim to be “the bank for en-
trepreneurs”—both while they are making
money and once they have made it—is the
rationale for the dedicated division for
Asia, which is minting billionaires fast. If
you are a tycoon whose personal and busi-
ness finances are intertwined, you might
want to sell shares in your firm and invest
the proceeds: why should you face the has-
sle of dealing with different parts of the
firm? Being joined up works: about half of
wealth-management inflows in Asia, Mr
Thiam says, come from referrals by local
investment bankers.
He had also bet on Asia at Prudential,
trying to buy aia, a big regional life insurer.
But that was predicated on the growing
mass of the region’s middle class. At Credit
Suisse, he is after the truly rich. In Asia’s
fragmented wealth-management market,
Credit Suisse’s SFr219bn of assets, or a 12%
share, ranks a healthy second, according toMagdalena Stoklosa of Morgan Stanley.
ubs leads the pack.
Asia still accounts for just one-sixth of
revenue and pre-tax profits. After decades
of globetrotting, the anchor of the firm re-
mains reliable Switzerland, which yields
fully half of profits. The integrated Swiss
bank reflects the same reasoning about en-
trepreneurs as in Asia, but in an economy
with several generations’ start. Two-thirds
of total growth in assets under manage-
ment in the past three years, Mr Thiam
says, has come from existing clients, which
are also more profitable than new ones.
Yet with wealth on the up and trading in
retreat, revenue growth has been sluggish.
Profits have risen mainly because costs
have been cut. Operating costs have been
slashed by 18% in four years. Rather than
shave budgets across the board, Mr Thiam
canned whole activities, such as private
banking in America. “Cost cuts have to be
binary,” he says. Then fixed expenses, such
as floor space and computer systems, can
be got rid of. He has also become stricter
about spending on contractors and consul-
tants, bringing some in-house. Rather than
worry about the ratio of cost to income, a
standard gauge of efficiency, he sets abso-
lute targets, so that increases in revenue go
to profit rather than being spent. Budgets
are still scrutinised in weekly meetings.
Though an outsider, Mr Thiam has re-
lied mainly on insiders. He brought in
Pierre-Olivier Bouée, the chief operating
officer, a colleague at McKinsey and Avivaand his chief risk officer at Prudential, and
Adam Gishen, the head of investor rela-
tions and communications, who advised
him at the Pru. But he has mainly promoted
from within, having decided that Credit
Suisse already contained the right people,
even if they were a rung or two from the
top. The chief financial officer, David Math-
ers, has been in his job since 2010. That is
unusual; incoming bosses at other trou-
bled banks have swept away more senior
people. One internal success, however, has
turned sour: Iqbal Khan, the head of inter-
national wealth-management, left abrupt-
ly in July.
With its time in purgatory seemingly
over, Credit Suisse is aiming to push its
roteinto double figures. Market condi-
tions permitting, it aimed to breach 10%
this year, but that now looks a stretch. With
global interest rates falling, trade wars rag-
ing and markets jittery, the months ahead
may be tricky for banks and wealth manag-
ers everywhere.
After four years, Mr Thiam is an outsid-
er no more. Running one of Europe’s banks
is a hazardous occupation: ask John Cryan,
sacked after less than three years at Deut-
sche Bank in 2018, or John Flint, ousted
from hsbcthis month, after 30 years at the
bank but a mere year and a half in the hot
seat. Mr Thiam says he wants to become a
Swiss citizen in due course. He was recent-
ly elected to the International Olympic
Committee, based in Lausanne. Perhaps he
will stay a while yet. 7Credit SuisseThiam’s tallySources:Bloomberg;companyreports;DatastreamfromRefinitiv;Dealogic;AsianPrivateBanker *At end of Q3 †Excluding mainland ChinaFinancials,SFrbn Risk-weightedassetsbyactivity,SFrbn Shareprices,January1st2015=100Ratio of price to tangible book value per share
June 28th 2019Asia†, private banks, assets under management
2018, $bnPre-taxprofitsbydivision,SFrbn0102030402015 16 17 18 H1 19Revenue Operating expenses0501001502002015 16 17 18*Markets Other2015 16 17 18 19050100150TidjaneThiamnew
CEO of Credit Suisse DeutscheBankUBS
BarclaysCredit
Suisse2015 16 17 18 19-8-6-4-2024Swissuniversalbank Asia-Pacific
Strategic resolutionunit OtherTot a l0 0.5 1.0 1.5 2.0
JPMorgan Chase
HSBC
Morgan Stanley
Citigroup
Goldman Sachs
Santander
UBS
Credit Suisse
BNP Paribas
Barclays
Deutsche Bank0 100 200 300 400
UBS
Credit Suisse
HSBC
Julius Baer
Morgan Stanley
OCBC Bank
BNP Paribas
JPMorgan Chase
Goldman Sachs
LGT