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Credit Suisse Plans To Launch A Wealth Business Next Year In China

Credit Suisse Plans To Launch A Wealth Business Next Year In China
Despite a chain of controversies, leadership changes, and changes in global strategies, Credit Suisse is still pinning its hopes on China and now intends to launch a new wealth business in the market next year, according to a report by Reuters quoting information from a senior Asia executive said.
"In spite of all these rumours flying around that Credit Suisse is pulling back or pulling out of China, China is a long-term play for us," Benjamin Cavalli, head of its Asia Pacific wealth management business, told Reuters in an interview.
Cavalli stated that the bank intends to begin offering wealth management services in China next year, following the acquisition of full ownership of its local securities venture in the first quarter of next year.
Credit Suisse's China growth plan into China happens at a time when the bank cut jobs and costs elsewhere in the world in its efforts to recover from a slew of losses and scandals. The Swiss bank named its asset management chief as its new CEO in July.
The previously unknown plans for the China wealth business for next year come on the heels of media reports that Credit Suisse was evaluating its China business.
According to Reuters, Switzerland's second-largest bank, which has designated 2022 as a "transition" year, is considering eliminating 5,000 jobs across the group – roughly one out of every ten.
Cavalli stated that the bank sees China as a long-term opportunity for selling wealth management products to the wealthy in the world's second-largest economy.
"We will never go into a new market where we feel we have to have a payback of three or four years and pull the trigger, this is unlike Credit Suisse," said Cavalli, who moved to Hong Kong in the new role this year from Singapore.
According to official data, China's wealth management market is valued 29 trillion yuan ($4.2 trillion) in June, with banks showcasing that household wealth was increasing more rapidly than economic growth of the coutnry.
In China, the allocation of proprietary and third-party wealth products is dominated by Chinese banks, in a market where there is growing growth in demand from high-net-worth individuals and the mass affluent. 
Despite the fact that Credit Suisse's Chinese securities venture had been delayed due to a variety of factors, including staff departures, Cavalli stated that the bank had already replaced some senior executives and was in the process of hiring more.
He predicted that a regulatory site inspection would take place soon.
"The securities joint venture full acquisition will hopefully be a Q4 or Q1 event next year," said the banker.
Credit Suisse increased its stake in the joint venture to 51% two years ago and has stated that it intends to take full ownership.
According to him, Credit Suisse has already hired 50 people for its wealth management division, including relationship managers, investment consultants, and those in charge of managing discretionary offerings.
Once the bank receives approval to take full ownership of the securities venture, the process for obtaining a wealth management license will begin.
"The wealth pool in China is significant. If I can just get 2%-3% of the wealth pool, that is a starting point and we would have done a lot already."
With financial markets down since late 2021 and inflation fears lasting, Credit Suisse's wealthy clients in Asia, like markets in other regions, are risk-averse.
"We see very little light at the end of the tunnel to suggest that there could be a potential recovery or that sentiment turns positive soon," Cavalli said.
Nonetheless, the bank's global presence, which includes onshore wealth businesses in Japan, Australia, Thailand, and India in addition to offshore wealth centers in Singapore and Hong Kong, has helped it to balance some of the market volatility, he said.

Christopher J. Mitchell

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