LONDON – The Swiss bank Credit Suisse said Thursday that it planned to separate its retail and private banking business in its home market from its riskier investment banking and trading operations in Britain and in the United States.
The move, known as “ring fencing,” is designed to protect the Zurich bank’s retail customers and shield the overall bank from the impact of problems in a single unit in the event of another financial crisis. Its larger rival UBS announced a similar move last month.
Although Credit Suisse avoided a government bailout during the financial crisis five years ago, the bank is facing tougher capital rules and tighter regulation at home designed to prevent a bank from being labeled “too big to fail” in the future. Swiss taxpayers injected billions of dollars into UBS during the crisis.
Credit Suisse said part of the goal of the newly announced program was to more closely align its investment banking operations to the regions in which they originate.
Under the plan unveiled Thursday, Credit Suisse will create a subsidiary for its Swiss-booked business, including wealth management and its retail and corporate and institutional clients in Switzerland.
Britain will remain the hub for its European investment banking business, where two operating subsidiaries will be combined into one unit.
Credit Suisse will shift responsibility for its United States derivatives business, which is currently recorded on its books as part of its international operations in London, to the United States subsidiary.
The restructuring has been approved by the bank’s board and is subject to regulatory approval, including final approval by the Swiss Financial Market Supervisory Authority, or Finma.
The program is “well underway” and is expected to be implemented by mid-2015, Credit Suisse said.
The changes come as part of an overall plan to make the bank less susceptible to collapse and better align the bank to a stricter regulatory regime.
The bank said last month it planned to streamline its investment banking business, including shifting its fixed-income operations and other businesses it is exiting to a nonstrategic unit within the investment bank. Credit Suisse and UBS have shed loans and other debt in recent years to meet Swiss regulatory rules, while also bolstering their capital reserves.
Credit Suisse also said last month that it would create a unit within its private bank to absorb legal and restructuring costs associated with reductions in its business aimed at overseas clients. Those costs include expected settlements related to tax investigations by the United States.