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Credit Suisse targeted by activist investor
[ZURICH] Credit Suisse Group AG, Switzerland's second-largest bank, is being targeted by a little-known local activist investor who says he wants to break up the lender into three parts.
Rudolf Bohli, who manages 250 million francs (S$346 million) at RBR Capital Advisors, has taken a 0.2 per cent stake in Credit Suisse, worth about 100 million francs, according to a person with knowledge of the stake purchase. Mr Bohli has met in recent weeks with senior managers at Credit Suisse to discuss some of his ideas, including a separation of the firm's investment bank from the private-banking units, the person said.
The Swiss lender two years ago started a restructuring led by Chief Executive Officer Tidjane Thiam, downsizing volatile trading operations and focusing more on managing money for the wealthy. Progress on boosting profitability has been slow and the shares have fallen by a third under Thiam. Mr Bohli will push for Credit Suisse to be split into an investment bank, a wealth manager and an asset-management business, the person said.
"The businesses at Credit Suisse are too integrated and the bank is still undergoing a big restructuring programme," said Thomas Braun, a portfolio manager at BWM AG, who holds about 4.6 million Credit Suisse shares. "Everything's possible, but is it reasonable and feasible?" Credit Suisse shares rose 1.7 per cent at 9.04 am in Zurich. Before today, the stock had risen about 10 per cent this year as analysts and investors turned more optimistic that the cost cuts are bearing fruit.
Profit rose 78 per cent in the second quarter as reduced expenses lifted the global markets business. The bank is scheduled to report third-quarter earnings next month and will update investors on the implementation of its strategy shift at an investor day.
Mr Bohli declined to comment when reached by phone. In July, the hedge fund manager exited his position in Swiss asset manager GAM Holding AG after failing to rally enough shareholder support for his ideas, including ousting the CEO. After that exit, Mr Bohli said in an interview that he didn't plan on making a bank his next target because of the size and complexity of such firms.
On its website, the firm says its only investing in Europe, where it "understands the cultural subtleties" and looks for "local alpha" producing stocks. One of its funds, RBR European Long Short, has returned an average of 9.6 per cent since inception in 2003, according to an investor update. That fund was up 15 per cent through August this year, after losing 11 per cent in 2016. In the update, Mr Bohli wrote that Credit Suisse was a "misunderstood jewel" with an undervalued wealth-management business.