How Credit Suisse’s faltering position in last three years impacted its India unit


Since the start of a series of bad news in 2019, when the Swiss-headquartered Credit Suisse first hit the headlines over the news of spying on a former wealth manager, the Indian unit of Credit Suisse, which operates as a branch model, has seen some deterioration in its deposit base, loan & advances, total income, and profitability.

In the last three years, via a series of missteps by the global giant, which also included the collapse of the Archegos Fund, an event which cost Credit Suisse more than $5 billion, has indeed dented the image of the Indian entity and, as a result, the trust of its wealthy clients in India.  
The Indian unit, which is mainly into wealth management, investment banking, and brokerage services, saw its deposit base stagnate at around Rs 2,800 crore between March 2020 and March 2022. The loan & advances have slipped from Rs 1,227 crore to Rs 947 crore in the three-year period.

This trend also reflects in the total income and profitability. The total income dropped from Rs 898 crore in March 2021 to Rs 804 crore in March 2022. In the same period, the net profit fell from Rs 330 crore to Rs 303 crore. The current fiscal data, however, is not available as they are not required to file quarterly or half yearly results.

In terms of productivity and efficiency, the numbers are not looking good. The business per employee almost halved from Rs 107.69 crore per employee in March 2021 to Rs 54 crore per employee. Similarly, the profit per employee fell from Rs 5.90 crore to Rs 4.32 crore.

The group has also been losing good talent with global leadership changes bringing instability. Neelkanth Mishra, co-head of Asia Pacific strategy at the bank, has also bid goodbye to the bank.

Since the Indian unit is heavily into wealth management and other services business, it has a comfortable capital adequacy ratio. In fact, the capital adequacy ratio is at 60.02 per cent for March 2022, which is way above the capital levels of Indian banks. Most Indian banks have capital adequacy levels between 12-17 per cent. 

However, unlike the Indian unit, the global parent is in need of much needed capital as it has decided to borrow up to $54 billion from the Swiss National Bank to meet its liquidity requirements.

Also Read: Credit Suisse crisis: Saudi National Bank says Swiss banking major never asked for any assistance after Oct