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Regaining Credit with investors

Matt Goodburn looks at how Credit Suisse is tackling its domestic difficulties

Credit Suisse’s UK retail business has had a turbulent year. The departures this summer of its long-standing and respected managing director Ian Chimes and sales director Mark Thomas were major blows, particularly as they were of a calibre that any fund company would struggle to replace.

The group’s UK multi-manager proposition continues to be highly lauded but it is the recent departures from its £1.5bn UK equity income funds that have been grabbing the headlines.

The departure of lead income manager Errol Francis prompted some advisers to recommend clients to switch out of the funds but the lack of communication from the group has angered even more.

A sales and marketing director at a rival UK fund firm, who wants to remain anonymous, believes that the problems with the income funds may go back further than the last few months and as far back as 2003 when the group was searching for a replacement for Bill Mott.

He says: “They tried to replace Mott on the cheap with Leigh Harrison initially but he had no track record or profile in income fund management. Then Errol Francis was appointed although he was more a growth than an income manager and ran a very small income fund at Barings.

“To turn performance round, they need to bring in some credible managers and make sure they have the commitment from the parent company that they are dedicated to the UK operation.”

He also believes that the company needs to improve its lines of communication.

“Many fund managers go through difficult times and it is best to be open and honest. While no one expects Credit Suisse to air all its dirty laundry in public, it has been far too defensive,” he says.

Credit Suisse vice-chairman and head of asset management for Europe, Middle East and Asia Mark Burgess describes the last 12 months as “a generational change” for the group as it looks to bring the UK asset management business back into its core European business as opposed to being run as a separate entity.

He admits that Credit Suisse has not communicated these changes well to the intermediary market but insists the firm is making a number of structural changes and is looking to increase its strength across the UK retail market as well as its institutional and private banking arms.

On the sales and distribution side, James Beddall has come in as head of third-party distribution while Steve Andrews has moved across to head UK sales alongside Mark Ingram.

Andrews has had some success in building up relations with the networks and life companies although Credit Suisse admits the appointment should have been made earlier.

Burgess, along with new global head of equities C Kim Goodwin, wants to bring Credit Suisse’s UK operation more into the global business rather than run it effectively as a boutique.

Goodwin is quick to point to the strength of other Credit Suisse managers within the UK retail space, such as European frontiers manager Liz Eaton and smaller companies manager Stuart Harris, as well as the highly successful multimanager proposition under Gary Potter and Rob Burdett.

She is looking to reassure intermediaries that the equity income funds are a priority in her recruitment drive. “I want to reassure the IFA market that our equity income funds are my number one priority. We manage over £1.5bn in equity income funds, placing us among the biggest managers of retail equity income funds, so our commitment to this sector is unwavering and we are taking every action necessary to ensure our funds continue to outperform for our clients,” she says.

Goodwin says she is interviewing across a range of fund managers internally and externally since joining the group from First State four weeks ago.

She says: “I have been impressed by the quality of the candidates I have spoken with so far. We are looking for a certain type of dynamic personality who appreciates the great opportunities available to him or her within a group with the global capabilities and resources of a company the size of Credit Suisse.”

She describes the recruitment drive as a search for solid performers who may not have been recognised yet by the wider market but are already turning in excellent performance.

Chelsea Financial Services managing director Darius McDermott says this means the group is unlikely to bring in the kind of big-hitters that IFAs want.

He says: “Credit Suisse is not going to be able to get the likes of Adrian Frost or Neil Woodford in but there are other good managers out there. Regardless of what the group says about its other UK managers and the restructuring, it is the income funds that intermediaries care most about.

“Their three-month performance has been reasonable but Errol Francis can probably take some credit and now he has gone. Strip out multi-manager and the income franchise is its biggest area and it has many good rivals in the sector.”

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