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At Credit Suisse, the Neven are blank. The disaster with the Greensill Fund shook the proud Paradeplatz bank. Now the race management is trying to regain control of events.
Quiet in the stable, according to order. The boss, Thomas Gottstein, is speaking now. The CEO announced yesterday on Bloomberg TV that he was considering an extensive separation of the asset management division, while the top CS executive ventured the idea of a “holding company.”
The statement is explosive. CS could put up its asset management, which it had long considered a pearl because profits were skyrocketing. It would be the end of the integrated CS model, which in Greensill’s case led to conflicts of interest à gogo.
Because Greensill was everywhere at Credit Suisse: in asset management, in the investment bank, in private banking. The bank made millions with its main customer, now it has faltered because of this.
At Asset Management, UBS made the rounds yesterday as a potential buyer for CS Asset Management. That is why Gottstein and the still president Urs Rohner had hired Ulrich Körner as the new head of the division.
Körner began his rise in the Swiss bench at CS. In 2007 he was even one of the candidates for the successor of Oswald Grübel at number 2. The position of CEO was finally given to the American Brady Dougan. The London-based investment banker had seen then-CS chair Walter Kielholz in a favorable light.
Rohner, also Papabile, was compensated with his career on the board of directors, while Körner briefly remained at the helm of the Swiss division, only to jump overboard at CS in the summer of 2008. A few months later, Nothelfer Grübel, his former sponsor brought him to UBS. This was on the brink of subprime mortgage disaster.
In early 2014, Grübel’s successor, Sergio Ermotti, gave Körner the opportunity to lead a top-tier unit at the largest Swiss bank. The Ticino native entrusted UBS Asset Management to the German with a second passport for Switzerland. Körner accelerated hard and promised a billion profit in a few years. He remained guilty of evidence.
In mid-2019 there was an abrupt exit, a leading American banker took over UBS Asset Management. This had already become a new force within the Körner group, now it flourished. Profit skyrocketed, the old wallflower became the new star.
While CS had sold or discontinued important parts like booming ETFs, UBS expanded its asset management step by step. To make up for the lack of size, CS bosses launched seemingly lucrative new products, including Greensill funds.
Now the CS pays the price for “overexploitation”. Your asset management has become a sales candidate. Ironically, UBS, as archrival, could take over.
For the division’s 1,100 employees around the world, a large portion of them in Switzerland, this is a terrifying prospect. Many would have to count on the end.
For observers, something historic is happening in the financial center. “Hear this: On Greensill, a seemingly irrelevant commercial finance firm, Thomas Gottstein wants to dismantle the classic Swiss private banking model at Credit Suisse,” writes the editor of the renowned blog Bronte Capital, which is betting on a declining computer science course.
To the critic, Greensill is much, much more than what the top of CS has been pointing to to the outside world. “If it were a billion dollar issue, it’s obvious what Credit Suisse would do,” writes the creator of Bronte. “I would sign the check and move on. And blame the old management.”
The fact that Chief Gottstein is now talking about a division of the group could only mean one thing. “For this to be a rational course of action (or even an action worth considering) the Greensill problem must be large. Really big. Like huge. “
Alles andere mache keinen Sinn. “So let’s have a proper reveal. And start provisioning, because at this point Credit Suisse is talking about it (telling us that Greensill is just a scratch), but at the same time it is deciding to destroy its own business model to remove cancer. “
