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Credit Suisse Group AG plans to double its workforce in China over five years as the firm accelerates its search for the country’s wealthy, trying to overcome a scandal that has hit once favored client and founder of Luckin Coffee Inc., Lu Zhengyao. .
The bank has largely normalized approvals for Chinese companies, ending the increased scrutiny on loans that followed. fabricated profit allegations at Luckin and a slowdown to weigh the impact of Covid-19. Credit Suisse will add to its workforce in China as it aims for a 100% increase in revenue there, Asia CEO Helman Sitohang said in an interview. His securities company in China had 154 employees at the end of last year, and the lender also offers financing, trading, wealth management and assets on the mainland.
Much of the company’s development will focus on expanding investment banking and advisory services for the growing ranks of China’s wealthy. Sitohang’s plans are key for Credit Suisse to meet its goal of doubling the contribution to revenue growth from strategic ultra-high-net-worth clients over the next three years. Separately, the lender has embarked on a broad assessment of risk controls following a series of deals linked to troubled companies, including Luckin.
“China is our strongest focus when it comes to staffing and infrastructure growth compared to any country in the world,” Sitohang said. “The worst of Covid’s impact on business in the region is behind us,” he said, referring to Asia.
Asia’s largest economy has the Most of the millionaires after the US and its financial openness this year has presented global banks and asset managers with an unmatched opportunity for expansion. Credit Suisse wants Asia to account for 25% of the group’s revenue in a couple of years, up from 17.5% today, said people familiar with the matter, who declined to be named to discuss internal affairs.
The fall of Starbucks Corp. rival Luckin and its billionaire founder surprised Credit Suisse and other lenders, who are struggling to recoup losses of more than $ 500 million in margin loans. The Swiss bank, the main underwriter for Luckin’s public offering, has launched an internal review, though CEO Thomas Gottstein has said it will continue to target wealthy Chinese entrepreneurs.
Credit Suisse is not alone in setting ambitious hiring targets for China and will have to compete with companies like Goldman Sachs Group Inc., JPMorgan Chase & Co. and others. Goldman sachs plans to double its workforce to 600 by 2025, while its Swiss rival UBS Group AG aims to do the same, bringing its investment banking staff to 400.
The Asian operations of Goldman Sachs and Morgan Stanley contributed 13% and 12%, respectively, to their global net income last year. UBS Asia accounted for 16% of its global operating income.
Sitohang made a significant hiring in June with Wang Jing, who led private banking at China Merchants Bank Co. Wang brought with him nearly three decades of banking experience, including helping to turn the Shenzhen-based lender into the country’s largest servicer for high-end clients. net worth.
Record income
On the investment banking side, Credit Suisse became one of the last global firms to win in April approval to take full control of a company it has managed with Founder Securities since 2008. Tim Tu and Daniel Qiu were appointed this year as CEO and head of investment banking and capital markets, respectively, for the China joint venture, which so far has struggled with revenue of $ 22 million last year.
About 30 bankers from the joint venture were expelled in July because Credit Suisse plans to recruit new talent, a person familiar with it said.
The latest earnings from the Zurich-based bank point to further successes in its push into Asia, with new net assets in the region’s private banking business growing by 80% in the second quarter amid a business boom. Wealth and investment banking advisory, the fastest growing areas, posted record revenue in the first six months, driven by growth in China as markets rebounded.
Sitohang, which has spent years changing the Asian business operation, gave up oversight of the unit in a global restructuring that is turning the business into a new investment bank. The region’s markets division posted a 54% increase in revenue in the first half.
Gottstein announced the renewal in late July by merging its trading and advisory business to generate 400 million Swiss francs ($ 442 million) annually for reinvestment and that includes as many as 500 layoffs in Switzerland. The bank plans to deploy two-thirds of its total capital in wealth management. Sitohang said he does not plan to eliminate any jobs on his territory, as the region’s workforce is “thin enough.”
“Released capital does not happen overnight, but the efficiency that we expect from both the cost and capital sides will be deployed again in wealth management,” he said. “Asia will be a priority.”
Stuck and unable to travel outside of Hong Kong since early March, its longest stretch in a city since 1989, Sitohang said recent months have shown that the bank’s business model works even under the most difficult conditions.
Lessons were learned, but the “portfolio model” in Asia that spreads risk has been vindicated, he said.
(Updates with breakdown of income in the eighth paragraph.)
