Credit Suisse offloads German operations
The sale of Credit Suisse’s private banking operations in Germany has come as something of a surprise, but the country remains a tough nut for foreign banks to crack
Frankfurt-based Bethmann Bank, part of ABN Amro, has purchased Credit Suisse’s German Private Bank for an undisclosed fee. The transaction sees Bethmann acquire $10bn (€13.6bn) in assets, making it the third largest private bank in Germany by asset size behind Deutsche Bank and Commerzbank.
Bethmann Bank (ABN Amro)
• 407 full time employees
• Branches in Berlin, Dortmund, Düsseldorf, Frankfurt, Hamburg, Cologne, Mannheim, Munich, Nuremberg and Stuttgart
• AUM – €24bn
• Services – DPM, investment advisory, strategic asset planning, foundations and NPOs, estate planning, credit and loans and alternative investments
Credit Suisse has made no secret of its desire to focus on the UHNW (ultra high net worth) and premium HNW communities. The move to divest from its German operations is consistent with its most recent attempts to cut costs by pulling out of
50 countries in a drive to save SFr4.4bn (€3.6bn).
Initially it was felt cost-cutting measures would only affect emerging market operations, but retrenching from Germany remains surprising. Previously, Credit Suisse had suggested that in mature wealth markets it would shut out less wealthy clients in favour of those with more than SFr1m, rather than shut up shop altogether. Still, by selling its German operations, Credit Suisse gains through cost savings in an expensive operations centre.
Credit Suisse has been under pressure from German authorities after paying Ä150m in 2011 to end an investigation of its employees in Düsseldorf. Germany has been a notoriously difficult market for non-German banks to succeed in, particularly Swiss banks.
Trim the fat
The wealth management and private banking sectors are becoming increasingly concentrated, as cost-income ratios remain above historically normal levels and wealth operators seek to leverage every advantage they have to produce leaner and more profitable service propositions.
Credit Suisse (German PB activities)
• 300 full time employees
• Branches in Berlin, Bremen, Frankfurt, Hamburg, Cologne, Munich and Stuttgart
• AUM – €12bn
• Services – DPM, investment advisory, foundations and NPOs, credits and loans and alternative investments (special focus on private equity, corporate advisory entrepreneurs and external asset managers)
ABN Amro, on the other hand, is aiming to become a leading European onshore private bank. By consolidating its position in the mature wealth market of Germany, behind Deutsche and Commerz, ABN will likely not need to deviate from its existing in-country offer in terms of client segmentation, service or local network coverage.
As bigger players shed unprofitable, smaller holdings in both mature and emerging markets, opportunities are presented to firms with a more specialised and heavy presence in those markets.
It is likely that 2014 will see plenty more consolidating activity in wealth management, as firms continue to seek competitive advantage by limiting costs.
Shaun Scoon is research associate at wealth management think-tank Scorpio Partnership
