Credit Suisse targeted for break-up by activist hedge fund

Tidjane Thiam, Credit Suisse CEO since 2015. Keystone

A Swiss hedge fund is poised to launch an activist campaign to break up Credit Suisse, tapping into investor impatience with the progress of the bank’s turnround under chief executive Tidjane Thiam. 

RBR Capital Advisors, supported by Gaël de Boissard, a former Credit Suisse investment bank co-head, is set to unveil the plan later this week at the JPMorgan Robin Hood investor conference in New York, according to people briefed on it. 

Run by Rudolf Bohli, former analyst and trader, RBR has had success with activist campaigns against GAM, the asset manager, and Gategroup, the airline catering company now owned by China’s HNA. RBR is based in the town of Küsnacht near Zurich. 

Credit Suisse has outperformed most European peers over the past year, but its share price – diluted by capital raisings – is barely half what it was when Mr Thiam took the helm in 2015. Over the same period, the benchmark Stoxx Europe 600 banks index is down just 13 per cent. 

According to people briefed on Mr Bohli’s plan, he will argue for a three-way split of Credit Suisse into a Wall Street investment bank that revives the old First Boston brand; an asset manager; and a wealth management group that also encompasses Credit Suisse’s retail and business banking operations.

PLACEHOLDER

RBR will attack the “dis-synergies” in the bank’s conglomerate structure and suggest the split could double the group’s current CHF40 billion ($40.9 billion) valuation, according to a copy of the plan seen by the Financial Times. 

“First Boston 2.0”, as conceived by RBR, would be slimmed down, spun off and floated, but also part-owned by staff through a partnership structure. 

Mr de Boissard, who was a contender for the chief executive job when Mr Thiam was appointed, has since become a fintech investor. 

But he retains a significant personal stake in the bank and is frustrated at the decline in its value. He has been consulted on the RBR plan and believes it has merit. He has told Mr Bohli that he is standing by in case help is needed.

Gathering momentum

So far, RBR is understood to have built only a small stake in Credit Suisse, amounting to between 0.2 and 0.3 per cent of the share capital. But it has signed non-disclosure agreements with 100 other investors, some of them existing Credit Suisse shareholders, suggesting the campaign could garner momentum. 

RBR’s GAM and Gategroup campaigns helped generate a 130 per cent return over two and half years, said a person close to the fund. Senior Credit Suisse representatives, including chairman Urs Rohner, have engaged with the hedge fund. 

Asked to comment on RBR’s intentions, Credit Suisse said: “While we welcome the views of all our shareholders, our focus is on the implementation of our strategy and of our three-year plan, which is well on track and which we believe will unlock considerable value for our clients and shareholders.” 

Credit Suisse is two years into a three-year restructuring plan designed to improve efficiency, pivot towards high-growth areas such as wealth management and Asia-Pacific, and reduce the capital allocated to its investment bank. 

Another investor day has been set for November 30, but Mr Thiam told the Financial Times in July that the bank’s strategy from 2018 would continue “the same as now”. 

Some shareholders have criticised the bank for previous strategic flip-flops, such as announcing and then aborting the listing of its Swiss bank, and changing its targets for costs and revenue. 

Activist investors have rarely targeted banks, despite low valuations in the post-crisis years. Break-up strategies are notoriously difficult to force through at banks, given regulatory constraints. Knight Vinke launched campaigns against HSBC and UBS with limited success.

Copyright The Financial Times Limited 2017