Reputation risk drives Credit Suisse strategy

Switzerland’s second-biggest bank is getting back to what it has done best in a bid to restore investor confidence by reshaping its business and boosting profitability. In a word, it’s about credibility. Faced with plunging core profits, Credit Suisse is embarking on a major overhaul to transform one of the world’s largest investment banks into a leading private bank and wealth manager. To accomplish that, the bank said on Wednesday that it would raise more than CHF6 billion ($6.3 billion) in capital by selling stock and cutting CHF3.5 billion in costs, including 1,600 Swiss jobs, by the end of 2018. It also plans to expand operations in Asia and emerging markets, particularly for their growing ranks of newly rich entrepreneurs. This is an attempt to “right-size” the investment bank so that it mainly provides services to wealth management. Part of the pressure comes from the new and costlier regulatory world that all global banks must navigate in the wake of the ...