(Bloomberg) — Credit Suisse Group AG bankers are trying to lure wealthy customers with higher-yield bonds and bonus deposit rates in order to quickly recoup as much as possible in the future. nearly $90 billion has just been withdrawn from the bank.
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Francesco de Ferrari, head of the Swiss lender’s wealth division, is mobilizing 1,800 of its relationship managers in a mass appeal campaign with offers including a reduction in the balance threshold granted enjoy interest rates from 5% to 6%. problem, the requester is not identified as the plan is private. In addition, the bank is offering bonds that pay a fixed interest rate of nearly 7% to compensate investors for lending them cash for a number of months, the people said.
Read more: Credit Suisse president says bank liquidity is improving
Credit Suisse is struggling to regain stability in what is arguably one of the least volatile businesses and the heart of a revamped organization — money management for the rich. However, amid online rumors swirling around the wrong question of the bank’s solvency in October, customers began withdrawing money that within weeks accounted for about 10% of de Ferrari’s business.
A Credit Suisse spokesperson said: “We are in close contact with our wealth management clients as we work out our new strategy. “Market headwinds lead to an unstable environment for our clients and we are fully focused on providing them with differentiated advice and solutions in line with market rates. .”
Shares of Credit Suisse were down 1.3% at 10:47 a.m. in Zurich on Wednesday and have lost about 65% this year.
The huge sums are leaving de Ferrari, who only assumed his current role in January, under intense pressure from Chairman Axel Lehmann and CEO Ulrich Koerner to recover assets, who say know.
Knock-On Effects
It’s not uncommon for asset managers to use such strategies at the end of the year to boost assets under management. Credit Suisse’s offer is not significantly higher than current market rates for some fixed rate deposits, which may limit its appeal however due to the perceived risk surrounding the institution. office. In November, the bank marketed the 11-year dollar bond at 9% to boost cash levels — a rate more in line with the junk bond market.
Ferrari’s task was further complicated by the knock-on effects of the massive withdrawals including reduced liquidity and a slump in global markets that prompted margin calls at a time when customer relationships was stressed.
Read more: Credit Suisse tapped wealthy clients to boost its recurring lending
Losses of more than $8 billion over the past two years make quickly rebuilding customer trust a daunting task. A senior Credit Suisse executive said the ongoing $4 billion funding round and efforts to maintain liquidity would help restore confidence in the bank, with the aim of its money being Customers will be reimbursed in several quarters.
The National Bank of Saudi Arabia is holding a stake of up to 10% in the company as part of a capital raise, investing up to 1.5 billion francs. A rights to rest issue is set to end this week.
Credit Suisse is expected to disclose updated assets under management with the announcement of fourth-quarter earnings on February 9.
customer call
Last week, Lehmann said the bank had reached around 8,000 wealth management clients comprising about 80% of assets under management.
“We ramp up the dialogue just to make sure they understand where we are and just to make sure we stay in touch,” Lehmann said in an interview with Bloomberg Television’s Francine Lacqua.
Often, however, contacting a customer is not a straightforward way to return money.
Some desks have been restricted from taking on new loans to fund customers’ leveraged investments until the next quarter due to lower liquidity, the people said. They added that those groups were told that new loans could not be made until customers brought in assets, paid off old loans or promised to do new business with the bank.
Other private bankers trying to convince customers to bring old and new money to the bank are also having to discuss margin calls on existing loans due to a widespread decline in property values. in the market, these people said.
The private banker said the push was not motivated by incentive but rather by fear of being fired. Credit Suisse said it has begun cutting 2,700 jobs, or about 5% of its headcount.
–With support from Ambereen Choudhury, Giles Turner, Cathy Chan and Myriam Balezou.
(Update with stake in fifth paragraph, funding context in seventh paragraph)
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