In a move aimed at boosting sluggish earnings from its Canadian banking operation, Switzerland's Credit Suisse has combined its U.S. and Canadian activities under a single management headquartered in New York.
Credit Suisse officials said they hope the move will enable the bank to offer a wider range of services while reducing costs. The reorganization does not entail any change in legal status of the Swiss bank's Canadian subsidiary and U.S. branches.
As part of the reorganization, which became effective July 1, Christopher W. Roberts, regional head for the United States, has been named chief executive officer in charge of North America. Klaus Kuebel, president and chief executive of CS Canada, will move to New York and become head of North American administration.
Robert Hines, former head of corporation finance for the bank in Canada, has been named chief executive of the Canadian unit. Both he and Mr. Kuebel report to Mr. Roberts.
The reorganization does not extend to CS First Boston, the Swiss bank's separately run investment banking unit.
"We've been in Canada for a number of years but frankly, it hasn't been as successful as we would have liked," Mr. Roberts said. "Canada's a tough market, so we're trying to put more of our resources together and get some critical mass."
Mr. Roberts declined to disclose earnings for CS Canada, which has $2.8 billion of assets. However, he did say the Canadian unit failed to meet the bank's goals for return on equity.
Canadian banking law requires Credit Suisse and 49 other foreign banks to operate in Canada through a locally licensed, separately capitalized subsidiary. This, foreign banks complain, has restricted their activities, and made it difficult for them to compete for corporate wholesale business in a relatively limited market dominated by a handful of extremely large local banks.
"Foreign banks, outside of Hongkong Bank of Canada, are not really meaningful players in the Canadian market," remarked Hugh M. Brown, a Toronto-based bank analyst with Nesbitt Burns Inc.
Kevin R. Choquette, an analyst with Levesque Beaubien Geoffrion, agreed. "I don't think foreign banks have ever made much money in Canada or ever will. Competition is much too intense and margins are far narrower than they are in the United States."
Under its new structure, Credit Suisse plans to use staff in New York with expertise in areas such as asset-backed securitization and project finance to develop business in Canada.
Mr. Roberts said the bank is setting up what is essentially a matrix system under which Canadian employees will report to local managers as well as product managers in New York.
Credit Suisse, Switzerland's third-biggest bank, has $11.3 billion of U.S. assets booked at onshore offices and an additional $5 billion booked offshore.
The bank runs its U.S. operations, including private banking, corporate lending, trading, and structured finance, through branches in New York and Los Angeles, an agency in Miami, and representative offices in San Francisco, Atlanta, Chicago, and Houston.
In Canada, where Credit Suisse ranks as the third-largest foreign bank, the bank operates through offices in Toronto, Montreal, and Vancouver.