Credit Suisse considers shrinking brokerage business to reduce risk

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Zurich-based financial services corporation Credit Suisse AG has turned its attention to the prime brokerage business as it looks for ways to reduce risk in its investment banking division.

An insider told Reuters that “the prime brokerage business is indeed part of the risk reduction exercise announced earlier,” meaning that the measures are part of the firm’s previously announced efforts to improve its risk profile in line with new regulations.

Credit Suisse admitted in October that its investment banking revenues had fallen by around 20%, saying that it planned to reduce risky assets by $7 billion and leverage by $60 billion, mostly through stripping back its rates business. This continues a trend at the firm of scrapping or cutting back on businesses in its investment bank that fail to provide robust return on investment – including, in the past, commodities.

On Friday, a panel of experts told the Swiss government that both Credit Suisse and UBS, the country’s two biggest banks, should be held to a leverage ratio or 4% by 2019 – higher than the current ratio set by international regulators, which stands at 3%.

 

 

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