Credit Suisse has wasted no time in kickstarting the strategy shift announced by the new chief executive Tidjane Thiam in June. The Swiss banking group announced on Wednesday a significant strategic shake-up alongside its Q3 2015 results which includes the split of its investment banking business into two investment banking divisions: Global Markets and Investment Banking and Capital Markets (IBCM).

The new organisational structure, which is aimed at growing profits and capital generation, will also include three geographic divisions – Swiss Universal Bank (CHUB), Asia Pacific (APAC), and International Wealth Management (IWM).

As part of the strategic shift, the bank will raise up to CHF4.7bn ($6.3bn) in new capital and slash its costs by CHF1.35bn by the end of 2018.

“The strengthening of our capital position today will allow us to be in control of our own destiny and drive a strategy aimed at making Credit Suisse a clear leader in private banking and wealth management, with distinctive investment banking capabilities, both here at home in Switzerland, in the US and in the attractive markets of APAC, the Middle East, Central and Eastern Europe and Latin America,” said Thiam.

The Swiss bank is the top provider of structured products globally year to date, excluding leverage and flow products, with a 4% market share and over €8.4bn in sales, and has already surpassed the €8.72bn sales volumes globally achieved in 2014. Credit Suisse has also a low number of products on offer currently with just 25 products open for subscription including 12 in the US market, nine in Germany, four in Austria and Switzerland, respectively. The bank has marketed over 12,529 products globally since 2002 of which over 5,000 structures are still live.

Credit Suisse’s strategy is focused on three fundamental objectives – the expansion of its profitability in its home market by growing its Swiss Universal Bank; the scaling up of its private banking and wealth management franchise in Asia, Eastern Europe, the Middle East, Latin America and Africa; and resizing the investment bank by focusing on its capabilities “that best support wealth management client needs”.

The implementation of this strategy will be supported by the proposed placings and rights offering and a simplified organisation which has been a matrix of two business divisions, each with co-heads, and four regions. The group will be restructured to create three new, regionally focused divisions: Switzerland, APAC and International Wealth Management serving Western Europe, Central and Eastern Europe, Latin America and Africa. Two other divisions – Global Markets and Investment Banking and Capital Markets (IBCM) – will sit alongside these regional businesses.

“The new organisational structure will be simpler and will have clearer reporting lines with the abolition of co-head positions,” stated the bank. “It is built around the needs of clients and puts the businesses closer to their markets. With group functions more closely aligned with the day-to-day activities of the operating divisions, the businesses will have increased accountability and control over their costs.

The changes in the bank’s executive team will see Thomas Gottstein take charge of the Swiss Universal Bank and Helman Sitohang head the APAC division. Iqbal Khan will head International Wealth Management while Timothy O’Hara will lead  the Global Markets division.

The new two divisions, Investment Banking and Capital Markets, resulting from the investment bank’s split will be headed by James L. Amine, with David Mathers chief financial officer; Romeo Cerutti general counsel; Joachim Oechslin chief risk officer; Pierre-Olivier Bouée chief operating officer; and Lara Warner chief compliance and regulatory affairs officer.

The bank said that it plans  to lower the capital allocated to investment banking activities, particularly through a significant reduction of the macro business (by 72% in risk-weighted assets (RWA) and 79% in leverage between 2Q15 and end-2015) and an optimisation of its prime business (by 50% in RWA and 25% in leverage over the same period). It hopes for  a material improvement of the bank’s breakeven point through CHF3.5bn in gross cost savings by the end of 2018.

These cost savings are expected to be achieved by a combination of simplifying mid- and back-office platforms, adjusting the bank’s footprint in London and a number of disposals and closures such as the transition of its current private banking brokerage business model and leveraging the bank’s investment banking and asset management capabilities for US ultra-high-net-worth clients which includes an exclusive recruiting arrangement to provide relationship managers and their clients in its US domestic private banking business an opportunity to transition to Wells Fargo advisers by early 2016.

Click the link to read the full announcement.

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