Credit Suisse (NYSE:CS) is reportedly on the lookout for buyers for J O Hambro Investment Management (JOHIM) – its U.K.-based private wealth management unit.  The decision is a likely consequence of the second largest Swiss bank’s ongoing process of streamlining its business model, which has drawn severe criticism over the losses incurred in recent quarters even as competitors including UBS (NYSE:UBS) reported decent profits. The sale is also another step for the bank toward maintaining the steep capital requirements imposed by Swiss regulators.
We maintain a price estimate of $27 for Credit Suisse’s stock, which is about 35% above the current market price – the effect of a major sell-off in European bank shares over the recent days due to Greece’s possible exit from the euro and the possible impact of this event on the global economy.
J O Hambro Investment Management was acquired by Credit Suisse in 2001 and is an independent part of the bank’s private banking business. Based out of London, the unit has about 100 employees on its payroll, managing assets worth more than £3 billion ($4.7 billion). Two-thirds of these assets come from JOHIM’s wealth management operations, while the remaining one-third is from its asset management business. The sale would hence reduce size of the bank’s wealth management and asset management portfolio by the respective figures.
The unit is a small part of Credit Suisse’s business – estimated to be worth £60 million ($100 million) today. But the sale is quite significant, as it emphasizes the bank’s organization-wide restructuring drive.Notes: