Swiss bank Credit Suisse is reportedly considering splitting its investment bank into three as part of a new strategy to save itself from years of scandal.
The Financial Times reports that the lender’s proposal entails dividing the group into three parts: an advisory part of the business, a “bad bank” to hold risky assets, and everything else. Credit Suisse
is planning to reveal the new strategy at its third-quarter results on Oct 27, which the FT reports will include thousands of job cuts.
Ulrich Körner was appointed chief executive during the summer to shake-up the bank after a number of scandals rocked the bank’s public image. The bank had already announced it would make an update on its strategy at the results. The bank told MarketWatch it would be “premature to comment on any potential outcomes” before then.
Earlier this month, Bloomberg reported that the board could revive its First Boston brand and was considering offering investment bankers an equity stake in the business, a proposal raised at an internal town hall.
But the FT cited sources close to the board’s discussion that the idea was not a priority.
The board has also reportedly discussed bringing back a strategic resolution unit – used under former chief executive Tidjane Thiam — which would combine the high-risk assets and non-core businesses and allow the bank to wind down challenging positions and sell its profitable securitised products business.
Körner was appointed to replace Thomas Gottstein during the summer after a number of scandals, lawsuits and poor trading rocked the reputation of Europe’s largest bank.
Credit Suisse has racked up losses as it deals with the fallout from the implosion at Archegos Capital Management as well as the collapse at Greensill Capital.
Former head honcho Tidjane Thiam stepped down in February 2020 for failing to manage a corporate spying scandal.
This month, Credit Suisse Group announced it would sell its Singapore global trust business, as it faced a $1.27 billion damages claim from Georgia’s former prime minister Bidzina Ivanishvili who accused the bank unit for failing to protect his investments.