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Credit Suisse (CS) Plans a Comeback in U.S. Private Banking

Zacks Equity Research

Credit Suisse Group CS is mulling a comeback in U.S. wealth management business after an exile of almost four years. The news was reported by Bloomberg. While the talks are still in early stage, the move is expected to bolster its private banking segment.

Per the article, the company is targeting Miami as the new base and seeks to add $15 billion of assets under management. The unit will address needs of wealthy Latin Americans.

In 2015, Credit Suisse had divested its U.S. brokerage to Wells Fargo WFC after it was hit by a penalty on client tax evasion.

Negative interest rates, competitive markets, elevated pressure on margins and transforming customer needs, together with other factors, have led Credit Suisse to expand into other regions.

The United States is considered to be one of the biggest wealth centers globally. Relatively higher interest rates and favorable regulatory environment support growth in wealth management business. Credit Suisse’s international wealth management business is focused on Latin America, Europe, the Middle East and Africa.

Credit Suisse is also restructuring in order to improve its prospects. Spending hundreds of millions of Swiss francs, the bank plans to transition the retail and commercial clients to a newly-formed "direct banking" unit.

Per the plan, the new direct banking unit will be catering 1 million retail clients, 60,000 commercial clients and 500 employees. The leader of IT and operations unit of Swiss Universal Bank will lead this unit.

Improved telephone customer service, along with a greater number of working hours and employees, will follow the digital transformation, differentiating Credit Suisse from other big banks. Notably, the bank will divulge further details in the first half of 2020.

Shares of Credit Suisse have gained around 5% year to date on the NYSE against the industry’s decline of 0.7%.

Currently, Credit Suisse carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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