Credit Suisse eyes Asia for biggest change of growth

Credit Suisse eyes Asia for biggest change of growth

Andrew Batson, Associated Press/Hong Kong

Credit Suisse Group, Switzerland's second-largest bank, is
looking to Asia for much of the future growth in its core private
banking business, a top executive says.

All of the Swiss private banks are having to face a slowdown
in their traditional business as many clients choose to keep
their assets closer to home, rather than in the vaults of Zurich.
The banks have tried to counter that by building up their
operations in new markets - of which Asia has by far the most
potential.

"My mission is to provide the growth for Credit Suisse,"
Joachim Straehle, a member of the executive board who heads
international private banking, said in a recent interview.
"There's only one region that grows by about 10 percent. I have
no other choice but to come to Asia and look for the growth."

Last month, Straehle moved to Singapore, which will give Asia
much more senior management attention than before. He called it
"something very new" for an old-line Swiss bank to run its entire
international unit out of Asia, but it reflects the shifting
economics of the business.

Private banking, the personalized service offered to people
who usually have at least US$1 million to invest, is Credit
Suisse's biggest single business.

The business grows by attracting new funds to manage. In those
terms, Asia is still relatively small.

The opportunity, however, is great. According to research by
Capgemini and Merrill Lynch, Asia had two million "high net worth
individuals" in 2003, holding a total of $6.5 trillion in
financial assets. Both figures have been growing by 8 percent to
10 percent a year. However, only about a fifth of that population
are believed to use private banking services.

With essentially flat growth in its home market, Credit Suisse
can only meet its target of 5 percent annual growth in private-
banking assets with Asia's fast growth.

"In my area we have to grow much faster than that," Straehle
said. "Europe and Switzerland are very saturated markets. There's
not too much wealth being generated."

Credit Suisse has increased its number of private-banking
employees in Asia by about 50 percent in each of the last two
years, he said, with total staffing now about 600 people.

Straehle conceded that Asia's fast-growing market of wealthy
individuals is hardly a "new discovery" for private bankers.
"Markets like Hong Kong are extremely competitive, even with our
brand name and our know-how," he said.

Credit Suisse not only has to face competition from its big
Swiss rival UBS AG, but also from global outfits like Citigroup
Inc. and HSBC Holdings PLC, who have substantial private banking
franchises in the region.

Other challenges are posed by the region's wide variations in
culture, laws and financial systems. Japan, by far the region's
biggest market, remains difficult for outsiders to crack. Credit
Suisse's trust unit was recently sanctioned by Japanese
regulators.

And China's enormous potential remains walled off by
regulatory restrictions and its nonconvertible currency. While
Credit Suisse has had a presence in the country since 1975, it is
still working on the puzzle.

"I haven't seen yet a private banking model that works for
China," Straehle said.