According to a report in Reuters,
Credit Suisse Group AG
) is planning to increase assets under management (AUM) in its
private banking division in Japan. At present, the Swiss Bank is
in troubled waters and its decision comes after other banking
majors like U.S.-based Merrill Lynch, a division of
Bank of America Corporation
) and French bank,
Societe Generale Group
) have already closed their private banking operations in Japan.
Credit Suisse believes that the exit of many banking majors from
the private banking sphere has opened up opportunities to gain
market share in the Japanese market. Further, the Swiss bank
believes that the demand for services that merge the banking and
brokerage business has increased in Japan in recent
Back in 2009, Credit Suisse had launched its private banking
operations in Japan and later in end-2011, it had acquired
HSBC Holdings plc
) private banking business there. Notably, at present, the Swiss
banking giant aims to cater to Japanese customers having more
than ¥1 billion ($10 million) in personal financial assets.
Japan is currently an attractive investment option for Credit
Suisse as the country is looking to promote sustainable economic
growth and recovery after the financial crisis and Fukushima
disaster in 2011. Credit Suisse has been experiencing a sluggish
economy for the past few quarters in Europe and hence, has been
eyeing profitable opportunities outside the continent.
Further, in the U.S., where the Swiss bank has a significant
footprint, it has been plagued by stringent regulations and weak
consumer demand owing to the sluggish economic recovery. Further,
it is facing probes by U.S. regulators for allegedly facilitating
tax evasion by American clients.
We believe that Credit Suisse's strategic expansion of its
private banking operations in Japan will be a much-needed boost
to its top line. Notably, the Private Banking & Wealth
Management division contributed more than 50% of the total
revenue of Credit Suisse in 2013 and expansion of such a
profitable aspect of its business will bode well for the company
going forward. However, the sluggishly recovering economy and the
stringent litigation remain looming concerns.
Credit Suisse carries a Zacks Rank #5 (Strong Sell).
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