Credit Suisse to consider selling LatAm wealth management unit; would keep Brazil

Credit Suisse Group AG (CS) is considering selling its wealth management operations in Latin America, part of a broad overhaul it seeks to carry out as part of a planned restructuring. Brazil, however, would remain under CS’s purview.

The bank operates in countries such as Mexico and Colombia and is in contact with potential buyers.

People who know the matter include Banco Santander S.A. of Spain and Intesa Sanpaolo SpA of Italy. No final decisions have been made.

In June, the bank said that Latin America accounts for about US$100,000 in assets and client loans. That includes operations in Brazil, where it also has investment banking activities.

Credit Suisse is evaluating globally which businesses it will keep, reduce or exit as part of its second restructuring in less than a year.

The new CEO, Ulrich Koerner, and president, Alex Lehmann, are looking to bolster confidence in Credit Suisse and return it to profitability after a series of losses and mistakes.

The people said that the changes in Latin America are being evaluated as part of a broader initiative to reduce activities and regions deemed non-core.

The business has about 200 private bankers and approximately CHF 100 billion (US$102.4 billion) in client business volume. The bank has been present in the region since the 1950s.

“We have said we will update on the progress of our comprehensive strategic review when we announce our third-quarter results,” the bank said in a statement.

“It would be premature to comment on potential results before then.” Representatives from Santander and Intesa declined to comment.

While the new strategy may lead to changes in the wealth business, major structural changes are expected in the investment banking division.

The company has been talking to potential buyers for its securitized products group, a business with US$75 billion in assets by one measure, and has floated the idea of giving traders an equity stake in the unit, portending a possible spin-off, Bloomberg reported.

Earlier this year, during a presentation to investors, wealth chief Francesco De Ferrari said the bank planned to focus on its top 20 markets and exit smaller-scale markets.

In the first quarter, 15% of the bank’s markets generated 70% of the unit’s turnover.

Credit Suisse has already exited sub-Saharan Africa, referring private banking clients there to Barclays, and announced plans to transfer its onshore business in Mexico to a local player but keep the more complex international clients.

Last month it put Marcello Chilov in charge of Latin America, in addition to his role as chief executive for the Brazil market, as part of an effort to merge the two businesses that began in March.

Credit Suisse also began reducing its regional staff, laying off 21 employees from the wealth business in Brazil after identifying redundant functions.

In the case of the investment bank, executives have indicated that the unit will be downsized significantly, moving to a more advisory-focused model that consumes less capital.

Board members have disagreed on the extent of cuts that should be implemented while still adequately serving the needs of wealth management clients, according to people familiar with the matter.

With information from Bloomberg