NEW YORK — Credit Suisse Group's reorganization is sounding the death knell for the vast majority of its traditional asset management business in the U.S.
The Zurich-based company will phase out most of this business before the end of the year, shifting its focus to alternative investment strategies and select forms of active management such as quantitative and enhanced index strategies.
The New York-based unit is attempting to repair a business that has experienced significant employee turnover, declining assets and poor investment performance in the past several years.
Officially, Credit Suisse said it will reduce its New York-based U.S. asset management headcount by 40%, to 450 employees from 750. But these figures include more than 300 alternative investment and cash professionals added to the asset management group from other parts of parent Credit Suisse over the last year.
Neither the alternative investments nor cash businesses will be affected by the layoffs, confirmed spokeswoman Suzanne Fleming.
Prior to the two integrations, Credit Suisse had 390 employees in its U.S. asset management business, according to data the firm provided to Pensions & Investments in July 2005. Effectively, with the alternative and cash strategies left intact, the layoffs will eliminate roughly 80% of the company's legacy Credit Suisse Asset Management employees in the U.S. (In January, Credit Suisse Group combined all of its businesses — asset management, private banking and investment banking — and eliminated the CSAM brand name.)
"They're really starting over from scratch, something they probably should have done a couple of years ago," said one source, who spoke only on the condition of anonymity. "They acquired some quality firms over the years, like BEA (Associates Inc.) and DLJ (Donaldson Lufkin & Jenrette Inc.), and really destroyed a lot of their value."