To make up for about $90 billion taken out of its coffers following rumors of insolvency, Credit Suisse Group AG has offered its wealthy clients higher-yield notes and bonus deposit rates, according to Yahoo! Finance sources who have asked to remain private.
The wealth unit’s 1,800 relationship managers have begun to call clients, presenting enticements such as a lowered threshold on balances entitled to a 5% or 6% interest rate and notes that pay nearly 7% if investors lend their cash for a few months, the sources said. Bankers have called about 8,000 wealth-management clients covering about 80% of assets, Chairman Axel Lehmann said during a Bloomberg Television interview.
The bank’s wealth management unit, run since January by Francesco de Ferrari, is one of the least volatile divisions and the center of its new focus. But it lost nearly 10% of its funds with the October rumors, putting pressure on its new head to recoup assets.
While wealth managers sometimes make such offers at the end of the year to boost assets under management, Credit Suisse’s enticements aren’t surpassing those of its competitors in any significant way, which may not excite clients who are already miffed by the bank’s problems.
Not to mention, the huge withdrawals caused reduced liquidity, and the declines in global markets have spurred margin calls at a time when client relationships are tense, both of which may make de Ferrari’s task quite difficult.
The bank, according to unnamed sources, is hoping that clients return over multiple quarters. The ongoing $4 billion capital raise, which includes Saudi National Bank’s 10% stake, and efforts to maintain liquidity may help restore trust in the institution, one senior executive told Yahoo! Finance.
Credit Suisse is expected to disclose its assets under management when it releases fourth-quarter earnings in early February. The bank is also cutting staff, aiming to reduce its workforce by 5%, or roughly 2,700 people.