Approach & Reporting Objectives & Achievements

Objectives & Achievements

Overview of our objectives in the areas of banking, society and the environment, in our role as an employer and in the dialogue with all our stakeholders.

Objectives 2017

 

  • We remain focused on our key priorities to ensure we are well positioned to grow profitably and produce long-term value for our shareholders. We are committed to maintaining a lookthrough CET1 ratio of 11–12% in the course of 2017, excluding the impact of the planned partial IPO¹ of Credit Suisse (Schweiz) AG by the end of 2017. We aim to achieve an operating cost base of below CHF 18.5 billion by end-2017 as a result of cost discipline and management, while continuing to invest in strengthening our client franchises and improving our control framework. We will strive to make further progress with our restructuring program in 2017 and to capture profitable growth opportunities across our franchises and geographies.
  • Continue implementation of the Legal Entity Program strategy and focus on the completion of the remaining major deliverables, including: launching service companies in the US, Switzerland and the UK, completing first non-public comprehensive capital analysis and review (CCAR) framework submission. In addition, the Legal Entity Program has been expanded to assess solutions following the expected withdrawal of the UK from the EU.
  • Continue to engage with stakeholders on applying environmental and human rights considerations in risk management processes related to business transactions and client relationships.
  • Participate in the consultation on the recommendations released by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (FSB TCFD) and engage with industry associations and relevant internal functions to develop approaches for addressing the FSB TCFD recommendations.

Objectives & Achievements 2016

Objectives Achievements
Our strategic ambition is to be a leading wealth manager with strong investment banking capabilities. In 2016, we focused on a number of strategic objectives: (i) generating profitable and compliant growth, (ii) reducing our fixed cost base and creating operational leverage, (iii) strengthening our capital position, (iv) strengthening our control and compliance environment and (v) resolving our legacy issues.

We made progress in delivering against our key strategic objectives during the year. Our increased focus on our ultra-high-net-worth individual (UHNWI) and entrepreneur clients allowed us to attract significant net new assets and grow our asset base at higher margins. We were able to achieve net savings of CHF 1.9 billion*, while investing in our client franchise and improving our control and compliance framework. We substantially completed the right-sizing of our trading activities in line with our strategic direction, and we freed up capital from business areas that we wanted to exit. In particular, in the Strategic Resolution Unit, we made significant progress in disposing of and de-risking legacy positions, with a 39% reduction in both leverage exposure and risk-weighted assets (in US dollars). This allowed us to strengthen our capital ratios and simultaneously invest in growth areas. At the end of 2016, we reached an important milestone in resolving our legacy issues with the settlement with the US Department of Justice relating to our residential mortgage-backed securities (RMBS) business – a business conducted through 2007. Closing the year with a look-through CET1 ratio of 11.5%, even after the settlement with the DOJ related to our legacy RMBS business, puts us in a comfortable position for 2017.

Further develop our compliance risk and controls governance, including defined roles and responsibilities within a clear framework, as well as providing transparency on the level of effectiveness and efficiency of the controls delivered.

We established the Chief Compliance and Regulatory Affairs Officer (CCRO) as a function at Executive Board level to ensure we are focused on preventing future Compliance risks to the bank. We established new units and technology:

  • Financial Intelligence Unit to help enhance the process of identification of existing and future anti-money laundering (AML) compliance risks.
  • Central Control Unit to strengthen the comprehensive know your customer (KYC) and formalities verification process for new and existing clients.
  • Compliance Investigations function to manage global reviews, and we further strengthened relationships with regulators.
  • Single Client View and Relationship Manager (RM) Surveillance, strengthening our holistic client and RM monitoring, providing transparency into our client and employee risk.

 

Continue to execute the Legal Entity Program with the start of operations of the new Swiss legal entity Credit Suisse (Schweiz) AG expected in the second half of 2016. In the US, we intend to establish the Intermediate Holding Company (IHC) by the July 2016 deadline.

2016 was a very important year for the Legal Entity Program, which saw a large number of key deliverables completed, including:

  • In Switzerland, we have established Credit Suisse (Schweiz) AG as a wholly-owned subsidiary of Credit Suisse AG to support the realization of our strategic objectives, increase our resilience and meet regulatory requirements.
  • Credit Suisse Holdings (USA), Inc. was fully established in the US in line with regulatory requirements and successfully started operations.
  • Credit Suisse AG, Dublin Branch, was opened in the first quarter of 2016, making Ireland an important hub for the bank’s prime services business in Europe.

Continue to actively engage in dialogue with regulators to strengthen our relationships and shape the regulatory agenda.

Credit Suisse continued to consistently engage in constructive and transparent dialogue with regulators on a range of industry and firm-specific topics designed not only to further strengthen the stability of the firm but also the wider financial system. During the past 18 months, we worked intensively towards satisfying regulatory expectations and have strengthened our approach to ensure a prudent and control-centric philosophy in our daily operations and culture. We also set up Legal Entity Boards with Non-Executive Directors to further strengthen governance. As a result, numerous regulators have acknowledged significant progress.

Enhance sustainability risk management by expanding training, introducing additional guidance tools for use by the front office and developing a suitable approach to monitor portfolio-level sustainability risks for certain sectors.

In 2016, we trained a total of 225 employees on sustainability risk management, and we introduced a checklist to support our front office employees when dealing with environmental and human rights risks in private banking relationships. Furthermore, we tested our newly developed Power Sector Guidelines, which provide guidance on managing environmental and social risks in the power generation sector, focusing on coal, hydro and nuclear power generation. In order to deepen our understanding of the climate policy risk landscape and to prepare for potential upcoming disclosure requirements in that space, we piloted an approach to identify and understand portfoliolevel climate policy risks for coal mining and power generation.

¹ Planned partial IPO of Credit Suisse (Schweiz) AG by the end of 2017, market conditions permitting. Any such IPO would involve the sale of a minority stake and would be subject to, among other things, all necessary approvals and would be intended to generate/raise additional capital for Credit Suisse AG or Credit Suisse (Schweiz) AG.

*2016 net cost savings represents the difference between 2015 "adjusted operating expenses at constant FX rates" of CHF 21.2 billion and 2016 "adjusted operating expenses at constant FX rates" of CHF 19.4 billion. "Adjusted operating expenses at constant FX rates" is a non-GAAP financial measure and includes adjustments as made in all our disclosures for restructuring expenses (CHF 355 million in 2015 and CHF 540 million in 2016), major litigation expenses (CHF 820 million in 2015 and CHF 2,407 million in 2016) and a goodwill impairment taken in 4Q15 of CHF 3,797 million as well as adjustments for FX (CHF (318) million in 2015 and CHF (293) million in 2016. Adjustments for FX apply the following main currency exchange rates for 1Q15: USD/CHF 0.9465, EUR/CHF 1.0482, GBP/CHF 1.4296, 2Q15: USD/CHF 0.9383, EUR/CHF 1.0418, GBP/CHF 1.4497, 3Q15: USD/CHF 0.9684, EUR/CHF 1.0787, GBP/CHF 1.4891, 4Q15: USD/CHF 1.0000, EUR/CHF 1.0851, GBP/CHF 1.5123, 1Q16: USD/CHF 0.9928, EUR/CHF 1.0941, GBP/CHF 1.4060, 2Q16: USD/CHF 0.9756, EUR/CHF 1.0956, GBP/CHF 1.3845, 3Q16: USD/CHF 0.9728, EUR/CHF 1.0882, GBP/CHF 1.2764, 4Q16: USD/CHF 1.0101, EUR/CHF 1.0798, GBP/CHF 1.2451. These currency exchange rates are unweighted, i.e. a straight line average of monthly rates. We apply this calculation consistently for the periods under review. Management believes that adjusted results provide a useful presentation for purposes of assessing our Group and divisional performance consistently over time, on a basis that excludes items that management does not consider representative of our underlying performance.

Objectives 2017

 

  • Maintain a close dialogue with relevant stakeholders on the topics of investor protection, tax rules, the stability of the financial sector and digitalization.
  • Demonstrate how a financial services provider like Credit Suisse can leverage its capital, products and services, clients, employees and network of public and private partners to address society’s most pressing challenges while delivering our strategy and strengthening our own institution. This will be highlighted by our 15 years of Investing for Impact anniversary in 2017.

Objectives & Achievements 2016

Objectives Achievements
Continue to engage in a dialogue with political representatives and regulators and actively participate in industry associations and working groups.
We participated in a close dialogue with relevant stakeholders on a variety of topics such as investor protection and tax rules. A particular focus of these discussions was, however, the finalization of the Basel capital rules and the “Too Big to Fail” regime as well as the outcome of the UK referendum on continued EU membership and its implications for the UK, as well as for Switzerland and the EU. We published our study “Swiss Financial Center 2016” as part of our constructive contribution to this ongoing dialogue.
Make a meaningful contribution to inclusive growth and global initiatives, such as the UN Sustainable Development Goals (SDGs), through our role as a financial intermediary, employer and client and through our combined Corporate Citizenship programs and initiatives as well as the collaboration with our business – continuing to leverage the skills of our employees through engagement opportunities.
Our regional and global initiatives in microfinance and education, including the Financial Education for Girls program, have provided additional financial services and education to an increased number of beneficiaries in 2016. We are addressing multiple UN Sustainable Development Goals (SDGs) – in particular SDGs 1, 4, 5 and 8. Furthermore, our partnership approach with NGOs, governments, employees and clients illustrates the potential of SDG 17 (Partnerships for the Goals), for example, through the Global Citizens Program and our activities in the area of impact investment.

Objectives 2017

 

  • Further embed the Conduct and Ethics Standards throughout our organization to ensure a common understanding as well as consistency about our expectations at Credit Suisse with regard to culture and conduct and to further drive alignment and standardization.
  • Continue to attract, develop and retain employees to optimally support our business.

Objectives & Achievements 2016

Objectives Achievements
Acquire, develop and retain employees to optimally support our business.
The new divisional structure of Credit Suisse was successfully implemented as of January 1, 2016. During 2016, we reviewed and enhanced our performance management process with a focus on two key areas: first, on ensuring that the personal objectives of employees are closely linked to the bank’s strategic goals, and second, on making sure that going forward, employee performance will be measured against the bank’s new Conduct and Ethics Standards. In addition, we believe it is crucial to provide employees with the flexibility they need to achieve a good work/life balance. To support the realization of this goal, we offer generous parental leave across different locations for parents as well as providing coaching and support for new parents who are returning to the workplace. We encourage all employees to make full use of their annual leave entitlement. In addition, all tenured employees can apply to take a sabbatical of up to three months in order to rest and recuperate before returning to work. We pursue a robust diversity and inclusion agenda with a view to increasing representation by gender and ethnicity among the bank’s management. We have also piloted training for managers to help them mitigate the impact of unconscious bias when making personnel - related decisions; this program will be rolled out globally in 2017. In addition, our work to promote high-potential female talent resulted in the highest ever number of women being promoted to the rank of Managing Director globally in 2016.
Ensure a sound liaison with organizations that represent employee interests and the Credit Suisse Staff Council in Switzerland on employment terms and conditions. We have maintained close and regular contact with our social partners in Switzerland. Representatives of our Human Resources department and business executives meet with representatives of both trade unions and the Staff Council at least once each quarter. This collaborative approach enables us to find solutions that take into account Credit Suisse’s social responsibilities and may go beyond the obligations required by law or collective bargaining agreements. In Switzerland, for example, the longstanding policy on social measures for organizational restructurings was revised and upgraded to form a social plan as of November 1, 2016. The plan contains a set of tools to avoid terminations of employment for structural reasons wherever possible and to develop options to enable employees to continue their careers within or outside Credit Suisse, especially in the case of employees aged over 50.
Support the implementation and the preparation of the partial initial public offering (IPO1) of Credit Suisse (Schweiz) AG. On November 20, 2016, Credit Suisse (Schweiz) AG2 successfully started operations. Approximately 6,500 employees were transferred to the new legal entity. The launch is an important milestone in the implementation of our Group strategy, which allows our Swiss business to build on the positive development over the past few quarters and gain further market shares in our crucially important home market.

1 Planned partial IPO of Credit Suisse (Schweiz) AG by the end of 2017, market conditions permitting. Any such IPO would involve the sale of a minority stake and would be subject to, among other things, all necessary approvals and would be intended to generate/raise additional capital for Credit Suisse AG or Credit Suisse (Schweiz) AG.

The scope of Credit Suisse (Schweiz) AG differs from the Swiss Universal Bank division of the Group.

Objectives 2017

 

  • Ensure a successful global ISO 14001 control audit under the direction of the certification company SGS.
  • Deepen engagement with key external stakeholders in relation to sustainable land use management.
  • Adapt the processes and documentation related to our environment management system to the new ISO 14001 standard (valid from 2018) by revising the governance model across all management areas and levels involved.

Objectives & Achievements 2016

Objectives Achivements
Further strengthen the ISO 14001-certified global environmental management system (EMS) through successful completion of the 2016 control audit and adjustment of the EMS to new processes and responsibilities, including preparation for the new ISO standard, to be implemented as of 2018.
We successfully passed the ISO 14001 control audit under the direction of the certification company SGS without any corrective measures – in 2016, the audit focused on buildings in the US and Switzerland. With respect to the new ISO standard, which will be valid from 2018, we conducted a comprehensive analysis of our existing ISO 14001 system in 2016 with a view to identifying any potential gaps in our environmental management system. In 2016, we were able to reduce our ecological footprint from operating activities by 10% to 215,800 tons of CO2 equivalents – thanks to the ongoing energy-related optimization of our properties, the further consolidation of the portfolio around buildings with high energy efficiency and the use of state-of-the-art IT infrastructure. With regard to the substitution of existing energy sources, we generated a total of 56% of electricity from renewable energy sources in 2016. In addition, we achieved global greenhouse gas neutrality for the seventh year in a row.
Revision of the sustainability strategy for operational processes, including development of longer-term operational ecology targets for environmental aspects.
We reviewed our existing sustainability strategy for operational processes, taking into account current international developments in combating climate change as well as recent best-practice developments in target-setting in environmental management.
Develop a new conservation finance product to further strengthen our impact investment offering.  We developed a conservation investment product around the sustainable oceans theme.