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Aug 26, 2019
Wealth: Credit Suisse to shift focus from branches to digital banking
ZURICH (Reuters) - Credit Suisse (CSGN.S)
said on Monday it would invest hundreds of millions of francs in
digital services and other parts of its Swiss division by the end of
2021 and said it no longer needed a bigger branch network in its home
market than its rivals.
Switzerland's
national flag flies beside a logo of Swiss bank Credit Suisse at its
headquarters at the Paradeplatz square in Zurich, July 31, 2019.
REUTERS/Arnd Wiegmann
Banks across
Europe have been closing branches and cutting tens of thousands of jobs
as customers go online and banks seek to save on their
bricks-and-mortar costs.
“The achievement of long-term success
will not depend on having the biggest branch network in the future,”
Thomas Gottstein, head of Credit Suisse’s Swiss Universal Bank (SUB)
unit, said without elaborating on any branch closures.
“Instead,
having the best digital offering – combined with access to advice from
any location and the best service quality – will be the deciding
factor,” he said in a statement.
The Zurich-based bank is
creating a new business area, called Direct Banking, for retail and
commercial clients, starting on Sept. 1 while carving out its Swiss
investment banking operations into a separately managed unit.
In
total, investments “in the high three-digit million range” through 2021
will include boosting the Swiss unit’s digital offering, hiring client
advisers, marketing and sponsorships, Credit Suisse said.
Beyond
digital services, Credit Suisse said it planned increased telephone
advisory services and “the provision of personal advice in the regional
network of branches”.
More details about the new branch concept would be provided in the first half of 2020, the bank said.
Credit
Suisse’s new Direct Banking would have about 1 million retail clients,
60,000 commercial clients, and more than 500 employees and would be run
by Mario Crameri, Credit Suisse said.
YOUTH, RETAIL LAG
“Credit
Suisse’s market share tends to be lower in Swiss retail banking and
among young bank clients than in most other client segments,” it said.
“Against
this backdrop, Credit Suisse has decided to adjust the business model
of its Swiss division and to make substantial investments.”
The
bank said it also planned investment in digital solutions for areas with
a strong advisory focus, particularly for wealthy clients,
entrepreneurs, companies and institutional clients.
The Swiss
division is sticking with financial targets communicated at Credit
Suisse’s 2018 investor day: above-market growth in revenue and client
business volume, a cost-to-income ratio of less than 60%, further
profitable growth over the medium term and a return on regulatory
capital of more than 18%.
The Swiss Universal Bank, which in
2015 was targeted for a now-shelved partial IPO as Credit Suisse sought
to raise cash, has increased its pre-tax income from to 2.2 billion
Swiss francs ($2.26 billion) in 2018, from 1.6 billion francs, over the
last three years.
The cost/income ratio improved from 68% to 58% over the period, Credit Suisse said.
Reporting by John Miller; Editing by Sonali Paul and Edmund Blair
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