Credit suisse’s contextual approach

For Credit Suisse Private Bank, represented by Zurich-based third-party product chief Burkhard Varnholt, open architecture distribution is one of the tools which should be born in mind when translating market views into third-party product creation.

“New products make no sense whatsoever if they are not embedded in a market context,” said Mr Varnholt, referring to a tranche of structured products launched out of Zurich to combat negative cash returns. Products such as the Callable Snowball note for bond investors, the Stability Note and various index certificates, available in a variety of currencies, have been known to sell SFr2bn (e1.3bn) in just 48 hours to private clients.

“We are not an issuer of these products,” said Mr Varnholt. “Employing the open architecture concept, we talked to investment banks and re-insurance companies.”

Citicorp was one of the providers selected, with the Swiss bank then re-packaging the deal into small lots for private clients. This approach has been one of the bank’s biggest contributor’s to revenues, with SFr4.7bn of structured products sold in 2002, SFr13bn in 2003 and SFr31bn in 2003. The SFr124m in revenues garnered in 2002 has almost trebled three years later. One catch, however, is that the investment bank partner used to issue the note is seldom disclosed.

“We rarely co-brand, in almost all cases, our products are branded Credit Suisse,” admitted Mr Varnholt, with his belief that own-branding is a big part of the value generation. “The customers don’t really care where it is manufactured, as 60 per cent of components of BMW are manufactured outside the company, and it’s the same for us.”

Varnholt: ‘we rarely co-brand’