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Credit Suisse to shrink prime brokerage business unit

Banking giant Credit Suisse (CS) has announced that owing to pressure from investors to cut down the leverage of its investment banking division, the firms plans to shrink its unit that is serving hedge funds.

Credit_Suisse_Zürich

In October 2014, the Swiss bank announced plans to cut leverage by about CHF70bn ($71.5bn). Currently, it is exploring several solutions to reduce the capital usage of its prime brokerage unit, reports the Financial Times.

Despite holding a robust market position, this unit is said to be one of the lower returning parts of the investment bank due to its intensive use of balance sheets.

As noted by the FT report, the bank also proposes to increase the prices it charges hedge funds for services.

Credit Suisse chief executive Brady Dougan said in 2013 that the firm aims to balance the investment bank uniformly with the private banking unit, and plans to distribute about 50% of the bank’s capital to each.

Besides reducing its unit, the bank is planning for further push towards electronic channels in its ‘global macro’ unit, people familiar with the matter told the Financial Times.

This ‘global macro’ unit presently handles government bond and forex trading.


Image: Credit Suisse headquarters at Paradeplatz in Zürich, Switzerland. Photo: courtesy of Thomas Wolf