By Brenna Hughes Neghaiwi and Oliver Hirt
ZURICH, June 8 (Reuters) – Credit Suisse is banking
on risk-taking billionaires to drive revenue growth at its
wealth management division.
While most private banking clients are trying to shield
their wealth from the coronavirus uncertainty by buying hedges
or shifting into cash, the world’s super-rich are using the
market tumult as an opportunity to bargain-hunt for acquisitions
and invest in higher-risk assets such as stock options and
Philipp Wehle, the head of Credit Suisse’s international
wealth management division, estimates this sort of activity
could bring in around $400 million in additional revenues
between now and the end of 2022.
“My ambition for strategic clients is to double the growth
contribution over the next three years,” said the German native,
who took over as Credit Suisse’s top banker for international
jet-setters last July after former boss Iqbal Khan left to head
wealth at UBS.
“We, myself included, are now having more discussions with
clients on how to invest or reinvest into the markets, how to
build strategic positions,” he said. “Some of our strategic
clients are looking to go into more risky assets, after
“This trend is visible from conversations with ultra wealthy
clients but also from business activity we were seeing. The
level of transactions in April was still above pre-crisis
Wehle’s division grew revenues 6% to 1.5 billion francs in
the first quarter due to clients trading more. The division
accounts for just under half of the bank’s overall pre-tax
Credit Suisse set aside $1 billion to cover the impact of
the coronavirus, primarily to its corporate lending business, in
the first quarter. Lending to wealthy clients, a business built
up under previous CEO Tidjane Thiam, was reined in as markets
went into freefall in March and some share-backed loans faced
“At the peak of the crisis, there were some shortfalls and
margin calls. They have been mitigated down to almost zero at
this stage, without material losses so far,” Wehle said.
While single-stock lending–often deemed a more high risk
business–had been more active before the crisis, Wehle said
such lending was still on offer, with the unit recently
undertaking a major single stock transaction with a
long-standing emerging market client.
As company valuations have dropped, ultra-wealth clients are
also looking to build strategic stakes in companies.
“There is more interest now in terms of conducting smaller
acquisitions,” said Wehle.
“Our ultra wealthy clients across all regions are asking:
are there good opportunities that are priced right? Are there
undervalued companies where we can build a stake?”
(Editing by Carmel Crimmins)