Credit Suisse does not help its wealthy clients to dodge paying taxes, chief executive officer Tidjane Thiam said on Tuesday, in the wake of suggestions made in leaked Panamanian documents that the Swiss bank has participated in widespread evasion.
Speaking to journalists in Hong Kong on the sidelines of a conference, Thiam also said that there would be no let-up in Credit Suisse's aggressive pursuit of Asia’s bulging billionaire ranks, whom he likened to present-day Rockefellers and Carnegies.
Documents held by Panama-based law firm Mossack Fonseca were passed to German newspaper Sueddeutsche Zeitung and then shared with the International Consortium of Investigative Journalists. Dubbed the Panama Papers, the ICIJ said the documents show how banks including Credit Suisse used the services of Panama-based law firm Mossack Fonseca to help billionaires and the poltically connected to hide money offshore from the tax authorities.
Although the 11 million documents are still being analysed, they have already revealed the existence of offshore companies linked to the families of many global leaders, including current Chinese President Xi Jinping.
“We do not condone structures for tax avoidance or any type of non-transparent activity,” Thiam said in response to a question about the documents. Mossack Fonseca has also denied any wrongdoing.
Since the global financial crisis Credit Suisse has redefined itself primarily as a private bank with investment banking capabilities focused on Switzerland and emerging markets.
It has rapidly grown its assets under management in Asia Pacific. In 2015 Credit Suisse saw record inflows of core net new assets in the region of CHF17.8 billion (US$18.56 billion).
Compliance
Thiam insisted that that growth has been lawful. “We are very insistent on tax compliance – every customer has to certify to us that they are tax compliant,” Thiam said, speaking at a small media briefing on the sidelines of the annual Credit Suisse Asian Investment Conference.
“When there is a structure involving a third-party beneficiary, we insist upon knowing the identity of the third party,” he said.
He said that the bank only wants to manage tax-compliant assets and has stepped up compliance after paying out fines for breaches and as a result has turned away any money that does not meet its standards.
"Since 2014 we have had a regularisation process underway," he said, "We've taken that pain quarter-after-quarter."
Credit Suisse agreed to pay a fine of $2.5 billion in May 2014 for helping Americans evade taxes.
“We only encourage the use of structures when they have a legitimate economic purpose,” said Thiam, who last year took the helm of Switzerland’s second-largest bank.
Thiam likened the wealth creation happening across emerging markets to the US in the late 1800s when people such as John. D Rockefeller, Andrew Carnegie, and Cornelius Vanderbilt – so called Captains of Industry or Robber Barons, depending on your view – amassed huge fortunes.
“At the early stages in developing economies what is produced is very wealthy entrepreneurs,” he said. “We want to be the entrepreneurs' bank – they benefit disproportionally.”
After the conference Thiam said he would spend five days in China meeting entrepreneurs.
Hong Kong is one of the top-10 most popular tax havens and the top place for intermediaries – banks, law firms etc – to operate, according to the Panama Papers. ICIJ used the country categorisation contained in the leaked internal client database to describe how many intermediaries were in each country.
“If you are a wealth manager you want to be where the wealth is being created and wealth is being created on a huge scale in emerging markets,” Thiam said.
Hiring plans
Credit Suisse is building business with the region’s billionaires by hiring more relationship managers. At the end of 2014, Credit Suisse had about 520 relationship managers and finished 2015 at around 590. Now it is 615 with a few offers in the pipeline, Thiam said.
The firm is targeting 800 relationship managers by 2018.
Credit Suisse is hiring as many other banks are retrenching from the region. “Clearly there is a big opportunity in China” he said. “We’ve been underweight in China.”
Thiam said that the bank was taking a counter-cyclical approach and taking a long-term view on China’s economic slowdown.
“It’s a great time to grow … We want to pick up growth when it is at its cheapest, when everyone is retrenching we have our pick of resources,” Thiam said.
