Credit Suisse is shutting down their U.S. private bank and Barclays sold their U.S. Wealth division earlier this year. Anyone have any idea of what's going on there and who's next?
@thebrofessor"
@sfbroker"
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I can only speculate, but I'm guessing it's just harder to be a competitive wealth management firm without a ton of resources. I'd guess that CS didn't want to funnel resources from its other businesses so they thought it'd be easier to just sell the unit. it wouldn't shock me if more small wirehouses go away, it just seems like the market is dominated by either RIAs or the big 3 (maybe plus Wells Fargo).
I'm really curious to see if Barclays will turn things around for Stifel, even though my sample size is small, they're not really a serious competitor, they don't attract a ton of talent, but maybe marty shafiroff can give them the swift kick in the pants that they need.
European banks are getting lean because of regulations & restrictions in their home countries.. the Europeans regulators have taken the too big to fail message seriously and instead of carefully propping up systemically critical for-profit institutions, have decided to actively reduce the number of systemically important institutions in the first place... Due to limits on the amount of risk they can take they cannot really be competitive with US banks in the wild west..
The Credit Suisse Private Bank generated a lot of revenues but very small profit. They probably didn't have a big enough ecosystem to cross-sell some of their more profitable products like J.P. Morgan Chase can.
They are still keeping their LatAm Private Bank which was always one of their strongest and most profitable brands. (The area is much less crowded than U.S. Private Banking)
The profit topic that was mentioned is correct. While the PB did generate a relatively good amount of revenue the business itself was not profitable enough or did it have the ideal scale to compete with the US domestics. Credit Suisse is refocusing its PB efforts on Asia, where it has a good foothold, and, as previously mentioned, it will remain a sizeable player in both LatAm and Europe. Wells Fargo will be taking over the company's PB US efforts.
thebrofessor I find the entire situation amusing. CS's Private Banking unit was never profitable because the firm never directed enough resources to help it grow. The irony is that, while not as profitable, it was a stable revenue generator that was never given enough room to grow. It's a shame, really, but such is life. That has been the case with CS's Private Bank for the last 15 years; much of this helps perpetrate the myth that Private Banking and Wealth Management are really the Red Headed Bastard Children of banks in the US. They have a very viable business which is the craziest part of the story. At least when their Private Banking unit was DLJ, they had a huge amount of room to grow and do what they wanted.
Sadly, I feel bad for the brokers and advisors. Much of their Alternative Investments platform is directly tied to products offered by the Investment Bank. It puts many of their brokers in a tough spot, especially when their books may have significant investments in these products. Plus there are other question about transitioning off of Pershing and that whole process (which will be a massive fucking nightmare, but that's a whole different story), how to handle the fees from these Investment Banking Products, what the new commission splits will be, etc. and then there's the poignent fact that no matter what happens, there will be defections, particularly if CS keeps the division. It's a shit show no matter what.
I don't think Barclay's WM business will turn things around for Stifel. I think whoever buys CS's Private Bank will be fucked by it - not because the talent is bad (quite the contrary actually) - but because, like most aquisitions, it will leave a real bad taste in everyones and there will be defections coming out of this. Although I can only imagine what will happen to the brokers and their direct support staff, I'm definitely curious how things like the trading desks and ops teams will fair with this going on.
I could be wrong, but I was under the impression that Wells had exclusive right over CS private bankers. I am not sure how much they paid for this "right", but I don't think it was a pure play acquisition. Although, it is funny because I have heard Merrill has poached some top teams, so either their are gonna be a ton of lawsuits or Wells is really getting fucked. Regardless, seems like a huge clusterfuck for both the bankers and the clients.
Exclusive is a load of shit and doesn't work. Think of it as an exploding offer instead. We know what Wells is willing to pay for the "Top Teams", but who knows how many will go elsewhere. Brokers can still refuse to take their business to Wells and go where they would like. This may just be a gaurenteed recruitment period, so that Wells gets First Shot at who they want before anyone can poach from CS. As I said, there are a ton of questions about the books of business that CS deals with, as well as integrating a Private Banking Platform into Wells' platform (If Wells were to do it right, build up Well's own UHNW platform in the vein of JPMorgan with the CS teams coming over as the core of that practice) and all the nightmares that come with it.
Bad news to start the day :(
I suspect FATCA is a contributing factor to CS's decision.
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