Credit Suisse to expand Asia private bank

By Saeed Azhar and Jeffrey Hodgson

SINGAPORE (Reuters) - Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) said on Monday the credit crisis has not derailed plans to expand its private bank in Asia, but warned revenue and margins for the unit could be hit near-term as clients move away from riskier assets.

Marcel Kreis, head of Asia-Pacific private banking for the Swiss bank, told the Reuters Wealth Management Summit in Singapore the bank could boost its private banking team in Asia by as much as 80 percent in three years and would aim to grow assets by 25 percent a year.

"What we are certainly seeing is a flight to safety in terms of cash so clearly that implies that revenue is going to be impacted, the margins are going to come down," he said. "But when this environment changes and clients start accumulating positions again ... then those margins will go up again."

Private banks typically earn higher fees investing client money in high-risk products like equity funds.

Credit Suisse has fared better during the crisis than its bigger Swiss rival UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) which suffered from $42 billion of writedowns linked to the subprime mortgage crisis in the United States.

Credit Suisse said earlier this month its private bank had benefited from strong net new assets in the third quarter.

Net new assets in Asia grew by 6.6 billion Swiss francs ($5.83 billion) in the first half of the year -- more than three times from the same period in 2007, Kreis said as the bank added more bankers.

A bank spokeswoman said Credit Suisse added 90 private bankers in Asia in the first half of the year.

Kreis said the bank continues to chart a growth plan in Asia despite the credit crisis that is wreaking havoc in emerging markets.

"We have fundamentally no plans to change the strategy that we have elaborated on a number of occasions, which is to grow the footprint here in Asia," he said.

He said the strategy includes expanding the offshore booking centers in Hong Kong and Singapore, as well as building onshore private banking centers in places such as Australia, Indonesia, Japan and India.

Kreis said he expects the private banking team in Asia could grow to between 650 and 800 people in three years from 440 at the end of June, and aims to grow assets by 25 percent a year.

The bank's Asia-Pacific division held 64 billion Swiss francs of assets at the end of June.

Kreis said the outlook for financial markets was unclear, so the bank was advising clients to invest in defensive assets like short duration U.S. Treasuries.

"Very few clients today, at this very moment, are actively and aggressively looking for buying opportunities. That can change very quickly, but as long as the jury is out on liquidity issues, everyone is trying to keep their powder dry."

(Additional reporting by Melanie Lim; Editing by Kim Coghill)