Credit Suisse’s wealth management (WM)
division reported a CHF34m ($38m) pre-tax loss in the third
quarter. The dramatic loss came after the bank set aside CHF478m to
pay for its cross-border tax settlements with US and German
authorities. The bank’s cost/income ratio has also spiked
significantly.

The Swiss bank’s private banking unit, which
includes the WM, corporate and institutional client divisions,
reported a 78% quarter-on-quarter decline in pre-tax income, from
CHF843m in the second quarter to CHF183m at the end of
September.

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AuM affected by currency
fluctuations

Assets under management (AuM) declined in the
third quarter driven by markets’ volatility and the weak value of
the US dollar and Euro against the Swiss franc, the bank said.

AuM at the private bank stood at CHF891bn, a
3% quarter-on-quarter decline, and a 4.7% year-on-year decline,
compared with CHF935bn as at 30 September 2010.

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Net new assets (NNA) in the private banking
unit stood at CHF7.4bn, a 35.7% quarter-on-quarter decline,
compared with CHF11.5bn as at 30 June. The WM business was
responsible for CHF6.6bn worth of NNA gains.

 

Cost/income on the rise

In the nine months to 30 September, NNA
declined by 18% on a year-on-year basis to CHF36.9bn, compared with
CHF45bn for the corresponding period a year ago.

Headcount was also hit. Staff numbers at
Credit Suisse’s private banking unit dropped by 200 in the past
three months from 25,700 in the second quarter.

The number of client relationship managers
(CRMs) also declined by 90 from 4,710 in the second quarter, with
the WM arm seeing a departure of 100 CRMs.

The cost/income ratio at the private bank
spiked sharply to 92.0 as at 30 September, compared to 69.9 in the
second quarter ending 30 June.

 

Strategic outlook

Credit Suisse said it will allocate resources
to “faster growing and large markets”, paying particular attention
to Brazil, Southeast Asia, Greater China and Russia.

Credit Suisse said these emerging markets are
set to increase their contribution to group revenues from 15% in
2010 to 25% by 2014.