Credit Suisse looks past short term volatility to plot expansion plans for Qianhai, Asia Pacific

Swiss lender Credit Suisse plans to continue expanding its business in mainland China – particularly in Qianhai, as well as the rest of Asia – despite the slowing economy, according to its Asia Pacific head.

Helman Sitohang, chief executive of the Asia Pacific division of Credit Suisse, said the bank would continue to hire this year in Asia Pacific to support expansion of its private banking and investment banking services for mainland Chinese and other Asian clients.

“We have a three year expansion plan from this year until 2018. We are not going to be affected by quarter to quarter market volatilities,” he said in an exclusive interview with the South China Morning Post.

Among his plans is the expansion of Credit Suisse’s broking business in mainland China via its 33.3 per cent-owned securities joint venture, Credit Suisse Founder Securities, which has received approval to begin offering securities broking services in Qianhai later this year. It is the first foreign firm to gain approval to offer brokering services in the free trade zone, enabling it to offer trading of A-shares in the mainland and Hong Kong.

The lender is one of the most active international banks trading Shanghai A-shares for clients via the Hong Kong and Shanghai stock connect scheme. Sitohang said Credit Suisse would further expand cross border trading when the Shenzhen and Hong Kong stock connect scheme is launched in the second half of this year.

The bank also wants to hire a total of 800 relationship managers in Asia by 2018 to expand its private banking and asset management businesses, and increase its focus on serving the rising number of high net worth clients in Asia.

Geographically, Sitohang wants to see expansion of Credit Suisse’s business in mainland China, Hong Kong, Taiwan, South East Asia, India, as well as Australia, Japan and South Korea.

The lender’s expansion plans come as Hong Kong and China are experiencing an economic slowdown this year. “We are here for the long term and are not deterred by short term negative news,” he said. Even with the slowdown, Asia excluding Japan is still expected to see economic growth of about 5 per cent this year, which is still much higher than the US and Europe, Sitohang said.

Credit Suisse also predicts the number of millionaires in Asia Pacific to rise by 66 per cent in the next five years. By 2020, 22 per cent of the world’s millionaires will be located in Asia Pacific, up from the current 19 per cent.

Sitohang said Asia Pacific is an important region for Credit Suisse. The division reported record revenues of 3.8 billion Swiss francs (HK$29.2 billion) last year, up 15 per cent year on year due to an increase in high-net-worth client activity and strong performance in equities sales and trading. Pre-tax income stood at 1.1 billion Swiss francs, up 27 per cent year on year.

The bank also recorded net new assets under management of 17.8 billion Swiss francs last year, with 3 billion Swiss francs of net new assets generated in the fourth quarter alone.

“This strong data shows that we have been able to maintain solid growth in net new assets from high net worth clients in the region,” Sitohang said.

In terms of client segments, he said Credit Suisse would focus on high net worth individuals, institutional clients, ultra high net worth entrepreneurs and corporate clients.

The Asia Pacific region has a total of 27,600 ultra high net worth clients with more than US$50 million in liquid assets, according to Credit Suisse’s global wealth report published in October. Sitohang said many of these clients are entrepreneurs who need investment banking services as well as more traditional private banking services, such as succession planning to pass on wealth to the next generation.

Credit Suisse is targeting business opportunities from these clients, and according to research it has developed on 900 family-owned companies around the world, with a minimum market capitalisation of US$1 billion, 76 per cent of them are in Asia. They include Hong Kong companies such as Cheung Kong Holdings, Henderson Land and Sun Hung Kai Properties.