Activist investor RBR pushes for Credit Suisse break-up

ZURICH • Activist investor RBR Capital Advisors has launched a campaign to break up Credit Suisse, hoping to capitalise on investor unrest after Switzerland's second-biggest bank lost about a quarter of its value since 2015.

However, the Swiss hedge fund led by Mr Rudolf Bohli, 48, has taken only a small stake in Credit Suisse and faces a steep challenge to rally the support needed to succeed.

"With a 0.2 per cent stake, Bohli can't make much progress," Zuercher Kantonalbank analysts Javier Lodeiro and Michael Kunz, who rate Credit Suisse's stock "overweight", wrote in a note.

The campaign comes roughly two years into Credit Suisse chief executive Tidjane Thiam's three-year plan to focus on wealth management and less on investment banking.

RBR, which has been in contact with Credit Suisse's management, wants to divide the company into an investment bank, an asset management group and a wealth manager accommodating the Zurich-based bank's retail and corporate banking operations, an RBR spokesman said.

The strategy, which will be outlined at the JPMorgan Robin Hood Investor Conference in New York this Friday, could see the revival of the old First Boston brand, the name of the United States investment bank Credit Suisse took control of in 1988.

Mr Thiam's restructure suffered an early blow when US$1 billion (S$ 1.36 billion) in trading losses prompted him to make even deeper cuts to the investment bank early last year. With the value of the stock diluted by two capital raisings totalling around 10 billion Swiss francs (S$14 billion), shareholders are still awaiting the first fruits of the painful overhaul.

Although shares had gained almost 10 per cent this year, the performance reflected only a partial rebound from a feeble showing last year when they fell nearly a third.

"There are enough frustrated shareholders who would do everything to raise the share price," said a Zurich trader.

RBR, partly named after Mr Bohli, was set up in 2003 as a boutique Swiss hedge fund and has around 250 million Swiss francs in assets under management.

Although its stake is relatively small, RBR said it has also signed non-disclosure agreements with around 100 other investors, including some shareholders in Credit Suisse.

RBR has recruited Mr Gael de Boissard, a former Credit Suisse investment bank co-head who left the bank in Mr Thiam's restructure, to support its campaign.

Credit Suisse yesterday said it remained focused on its strategy.

"While we welcome the views of all our shareholders, our focus is on the implementation of our strategy and of our three-year plan, which is well on track and which we believe will unlock considerable value for our clients and shareholders," a Credit Suisse spokesman said.

Credit Suisse has argued that keeping an investment bank is vital to cater for the more sophisticated needs of wealth management clients whose assets stretch into the billions of dollars.

But while analysts doubted Mr Bohli's break-up plan would gain the necessary traction with other investors, some agreed that Credit Suisse could still pare back its investment bank even further.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 18, 2017, with the headline 'Activist investor RBR pushes for Credit Suisse break-up'. Print Edition | Subscribe