Credit Suisse Group AG
) is on its path to acquire the wealth management division of
) located in Europe, the Middle East and Africa region. The
acquisition will comprise assets worth $13 billion and comes as a
strategic move to offset Credit Suisse's vulnerability to the
uncertainties of investment banking. The deal is expected to be
completed by the end of 2013.
This acquisition will mark Credit Suisse's first noteworthy deal
following its acquisition of Brazilian investment fund
Hedging-Griffo in 2011. However, the details of the deal have not
Being the 5th largest bank in the world, Credit Suisse possesses
an approximate $843 billion under its management, indicating that
the assets acquired from Morgan Stanley are relatively modest.
Credit Suisse's assets are vulnerable to fluctuations on a daily
basis mainly due to irregularities in the market and continuous
changes in foreign currency. Thus, it is investing in wealth
management considering the fact that revenue generation from this
segment is stable compared to investment banking.
) has increased its focus on private banking. In Oct 2012, it
began reducing its exposure to fixed-income investment banking.
Likewise, Credit Suisse is striving to reduce costs associated
with private banking operations, which it intends to achieve by
In 2011, Credit Suisse acquired a private bank named Clariden
Leu. Following the integration, Credit Suisse allowed Clariden
Leu to operate separately. However, some customers of the bank
withdrew their money from Clariden Leu following the integration.
Recently, Swiss Banks received a lot of flak for helping overseas
investors avoid paying taxes. Due to this, Credit Suisse's
European customers withdrew their deposits, inducing huge
Further, the offshore accounts of Credit Suisse's private banks
are being reviewed by U.S. investigators. Owing to this, in
2011, Credit Suisse made a provision of 295 million francs.
Of late, Credit Suisse has become a cautious acquirer. It is
primarily focused on its capital raising plan by selling its
exchange-traded fund (ETF) business to
). Further, the company is trying to raise its profits by
incorporating changes in its overseas wealth operations.
Credit Suisse currently retains a Zacks Rank #5 (Strong Sell),
whereas Morgan Stanley currently holds a Zacks Rank #2 (Buy).
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