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Credit Suisse pulls ahead of UBS

UBS has always looked down its nose at its cross-town rival, but Credit Suisse under Brady Dougan has turned the tables on the blue-bloods. As UBS remains mired in a potentially catastrophic legal tussle with America’s tax collectors, CS is winning market share across the board.

With its second quarter results, Dougan has shown that the storming first quarter was no flash-in-the pan. Stripping out various one-offs (including a counter-intuitive 1.1 billion Swiss franc loss thanks to an improvement in the value of its own debt), Credit Suisse’s net income increased 62 percent on the first quarter, to 2.5 billion Swiss francs. That is equivalent to a boom-like 27 percent-plus return on equity.

Dougan can point to some long-term strengths underpinning this result. The bank has increased its tier 1 capital ratio to a market-leading15.5 percent. And it has managed to attract funds to the private bank, despite the collateral damage inflicted on all Swiss banks by UBS.

As Dougan puts it euphemistically, “We have continued to prepare our Wealth Management business for the new environment by expanding our international footprint and building an efficient, global platform that complies with applicable laws and regulations.” In other words, CS is not going to repeat UBS’s mistakes, and is going to diversify away from an America whose sympathy for Swiss bank secrecy is disappearing fast.