Brazil is a key market in the ‘new Credit Suisse’, says chairman Axel Lehmann

Brazil is a key market in the strategy of the “new Credit Suisse,” the crisis-ridden major Swiss bank that is busy restructuring globally, according to Axel P. Lehmann, chairman of the financial group, who held a round of meetings with local clients last week.

In a pause for a chat with the local outlet Valor at the bank’s headquarters in São Paulo, he states that the operation in Latin America’s largest market suffered withdrawals in a similar proportion to other markets such as Asia, Europe, and the United States, with 85% of the 2022 withdrawals concentrated in the last quarter.

The move followed the viralization of a malicious tweet that originated in Australia in late September, which pointed out that the bank would be on the verge of collapse after a period of problems that have dragged on since 2020.

The institution had to make billion-dollar provisions to reimburse customers for losses on vehicles owned by British manager Greensill Capital and family office Archegos Capital, which went bust.

In its results presentation, with its fifth consecutive quarterly loss, Credit Suisse revealed the size of the exodus between the third and fourth quarters, with redemptions of around CHF110.5 billion, equivalent to US$112 billion, in asset management, equity, and the Swiss bank unit.

In Brazil, in what is visible inside the investment funds, the institution’s assets shrank from R$105.5 (US$20) billion in September to R$84.1 billion in December, according to data from Anbima, which represents the capital and investment market.

In the year, there were R$16.7 billion of net redemptions. This is a partial picture since it does not include managed portfolios and positions of Brazilian clients abroad.

Valor said Credit Suisse was not open to giving figures on the Brazilian market.

Still, it is recognized as the most successful foreign group in the wealth management business in the country, gathering a volume of around R$300 billion under its umbrella, according to industry estimates.

When it was in the middle of turbulence, those in the market cogitated that the group could eliminate the local operation to capitalize itself.

According to Lehmann, there would be no lack of interested parties, but this hypothesis is off the table.

“On the contrary, we want to grow the business here. We have been in Brazil for many years; it is a great opportunity.”

In late October, Credit Suisse announced a US$4 billion capitalization led by Saudi National Bank (SNB), agreed to sell its securitization unit and outlined plans to break up its capital markets and advisory businesses under the revitalized Credit Suisse First Boston brand.

The group has also committed to cutting costs equivalent to CHF 2.5 billion by 2025. Like the other regions, Brazil should contribute, but according to Lehmann, there is no specific plan to reduce employees here.

“When you look at the new Credit Suisse, we now work with a very strong Swiss core. And then we have growth opportunities,” said Lehmann to Valor.

“They are in Asia-Pacific, the Middle East, and Brazil. So it’s key for us, especially regarding wealth management.”

But we have a large asset management franchise and a real estate franchise in the investment banking business. It is an operation that works very well together, providing the right coverage for the market here.”

CLIENTS ARE COMING BACK

Credit Suisse clients are bringing money back to the bank, according to group CEO Ulrich Körner. “The outflows have gone down very sharply,” Körner told broadcaster CNBC on the sidelines of the Davos World Economic Forum (WEF).

“And we now see money flowing back into different company areas.”

Also, Chairman of the Board Axel Lehmann had told Swiss media that clients had recently withdrawn hardly any more money from the crisis-ridden bank.

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