Wells Fargo and Credit Suisse enter distribution agreement

Wells Fargo and Credit Suisse have entered an exclusive agreement to strategically expand their relationships to make additional investment banking and asset management offerings from the Swiss bank available to the Wells Fargo distribution network.

The agreement will help the Swiss bank strengthen its US private banking, which is not positioned to compete in scale and does not meet profitability criteria, according to the bank’s third quarter 2015 financial report. Credit Suisse has decided to transition its private banking brokerage model and leverage investment banking and asset management for US ultra-high net-worth (UHNW) clients.

“The exclusive recruiting arrangement gives legacy Credit Suisse relationship managers the opportunity to have a smooth transition over to Wells Fargo advisers, if they so choose,” said a banker close to the agreement. “In the recruiting process, there is protocol set up between firms… for those relationship managers who want to move over, allowing for a full integration between the two parties.”

Investment banking and asset management products include a very broad suite of potential collaborations. The arrangement is still in the process of being worked through and the banks are in the process of trying to define the scope of potential collaborations.

It is unclear whether Credit Suisse’s structured products will fall into the scope of investment banking and asset management offerings that the Swiss bank wants to make available to the Wells Fargo distribution network. “It’s too early in proceedings to know exactly what this arrangement will look like,” said a Credit Suisse spokesperson.

Credit Suisse holds second place for structured products sales in the US market so far this year, with $6.8bn across 1,020 products, amounting to a 15% share of the market, according to SRP data. This has already exceeded sales and issuance figures for all of last year by 36% and 46% respectively, when the bank held a 10% share of the market with $5bn across 696 products. Wells Fargo’s has sold $896m across 114 structured products in the US year-to-date, up 57% from last year’s $572m sold across 78 products.