ZURICH (Reuters) - Credit Suisse's (CSGN.VX) private banking arm will swallow its smaller asset management unit and absorb some investment bank activities, triggering a management shake-up of those jockeying to succeed its chief executive.
The Zurich-based bank also reinforced its commitment to the fixed income business, all but abandoned by Swiss rival UBS UBSN.VX. Credit Suisse promoted debt banker Gael de Boissard, who will co-run its investment bank from November 30 and join its top management team from next year.
De Boissard will run fixed income and head Europe, the Middle East and Asia. Eric Varvel, now chief of investment banking, will run equities and the investment banking department, which includes corporate finance, as well as becoming chief executive of Asia-Pacific, the bank said.
At the private banking unit, which looks after the financial affairs of wealthy clients, current head Hans-Ulrich Meister will be joined by asset management head Robert Shafir, who is credited with making his former unit more profitable, though it is still dwarfed by the private bank and investment bank units.
The changes shuffle the top executives in the running to succeed Chief Executive Brady Dougan, even as the 53-year-old American in charge since 2007 seems to have cemented his position by keeping Credit Suisse focused on investment banking.
"The two names mentioned most often (to succeed Dougan) are Meister and Shafir. They don't get along, so if one jumps ahead, then the other one is likely to leave," an industry source who has worked with both men told Reuters last week.
The succession plan for Dougan has been under scrutiny since the CEO came under heavy fire when the Swiss central bank pushed Credit Suisse to raise more capital earlier this year.
The shakeup potentially weakens Meister, a 53-year-old Swiss retail and corporate banker who has made no secret of his ambition as he moved swiftly up the bank since joining from UBS in 2007, but who is seen as scant on international experience.
By contrast, the measures strengthen Shafir, a 54-year-old American virtually unknown in Switzerland except as Credit Suisse's highest earner in 2011, when he took home 8.5 million francs in overall pay.
Credit Suisse said Shafir would take responsibility for all private banking and asset management operations in the Americas. Meister will run private banking in Switzerland, Europe the Middle East, Africa, and Asia, plus all Swiss client businesses.
Meister and Shafir will jointly run securities trading in Switzerland for corporate and private banking clients, which will be moved from the investment to the private bank.
Credit Suisse, which recently announced an extra 1 billion Swiss francs ($1 billion) of cost cuts, said the new structure should produce further synergies and would also meet regulators' demands to align legal entities with management structure.
"The changes are due to new regulatory requirement for systemically important banks such as CS to set up living wills and contingency plans which separates the Swiss business more easily from other parts of the business such as the US business," said Bank Vontobel analyst Teresa Nielsen.
Bank Sarasin said the measures fall short when compared with UBS, which said three weeks ago it would exit many fixed-income activities in the face of tough capital rules that make it harder to turn a profit from trading.
"Today's news looks a little bit like trying to do something to react on competitor's news from UBS two weeks ago without having much to say," said Sarasin analyst Rainer Skierka. He rates Credit Suisse at neutral.
Credit Suisse prides itself on having avoided a government bailout when UBS took one in 2008, but Dougan has been accused of squandering the bank's advantage since the financial crisis.
"The total takeover of the Americans," blazed the widely-read Swiss banking website Inside Paradeplatz, accusing Dougan of a massive shift away from the bank's Swiss roots in private banking by boosting the American Shafir.
At 1557 GMT, Credit Suisse shares were 2 percent lower at 21.13 francs, underperforming the broader European banking sector index .SX7P, which was down 0.6 percent.
So far this year, Credit Suisse shares have shed 4 percent compared to a 16 percent rise in the European banking sector .SX7P and a 28 percent surge in UBS, much of that rise since it announced its restructuring last month.
Meister and Shafir will also oversee Solution Partners, a team of former investment bankers who provide tailor-made products to the wealthiest clients, typically those with more than $50 million in assets.
Top executives Osama Abbasi and Fawzi Kyriakos-Saad, who run Asia Pacific and EMEA, respectively, will leave along with private banking chairman Walter Berchtold, long seen as among the candidates to replace Dougan.
The bank did not immediately disclose whether Varvel, who has worked in several posts in Asia, would move from New York to Asia as a result of the revamp.
In an unrelated development, the New York attorney-general is preparing to file a civil lawsuit against the bank for misleading investors who lost billions of dollars on mortgage-backed securities, a source told Reuters earlier Tuesday. <ID: nL1E8MK12B> ($1 = 0.9413 Swiss francs)
(Reporting By Katharina Bart. Additional reporting by Ruppert Pretterklieber.; Editing by Will Waterman)