Credit Suisse To Prune Prime Brokerage

Dec 8 2014 | 6:57am ET

Credit Suisse plans to cut back on its prime brokerage business—one of the leading players in the industry—as part of its effort to boost its capital ratio.

The bank plans to bring down its prime brokerage’s capital usage, both by reducing its size and increasing prices for clients, the Financial Times reports. While Credit Suisse’s hedge-fund services arm is among the biggest in the industry, it is one of the lowest-returning parts of its investment bank.

Credit Suisse in October announced plans to cut leverage by some 70 billion Swiss francs (US$71.5 billion), in hopes of evenly dividing its risk-weighted assets between its investment bank and private bank. Currently, the former accounts for about 57% of those assets. Like other banks, Credit Suisse is under pressure both from regulators, who have mandated higher capital ratios, and investors.

As part of that effort, the bank is also considering an increase in its global macro business’ use of electronic channels.

It is unclear how many job cuts, if any, will be included in the prime brokerage reduction.

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