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CNBC Transcript: Interview with Tidjane Thiam, CEO of Credit Suisse

Following are excerpts from a CNBC interview with Carolin Roth and Tidjane Thiam, CEO of Credit Suisse, from Zurich.

TT: We've always said that we felt we were adequately capitalized after the capital raise of last year, when we moved to 11.4, and in a very unsupportive environment we showed in Q1 - in spite of the massive losses we incurred - we stayed at 11.4, so we defended that position, and now in Q2 we've improved that position to 11.8. The guidance we gave is 11-12% for 2016 and we think that's adequate.

CR: You still remain very cautious, though, for the second half of the year. Can you give me any indication what the third quarter has been like so far?

TT: Look we've been very cautious effectively because everybody knows what the uncertainties are - you know, Brexit. Because nobody really knows how that's going to play out. I mean, we listen to all the commentary but nobody really knows and it's going to be with us for a while because the clarification will not come before 2019 or so. You've got the U.S. election which is a big unknown. You've got a political, macro-economic, political development in the Middle East and oil prices started sliding again. You have a French election in May next year, you have a German election in the summer, you have Italian referendum in the fourth quarter - the list is long of reasons why markets may feel a bit uncomfortable. So we always prefer to be cautious.

What it means for us is that we have to drive our plan because we think our plan addresses that. The plan is to, where we believe there is profitable growth -- you've seen our international wealth management go from 500 million of outflows to 10.8 billion of inflows this half. You've seen Asia operating 5 billion of inflows. We're continuing to push capital towards those areas where we believe there is profitable growth. We are continuing to lower the cost, which increases our resilience in the difficult environment, managing the cost down, lowering the risk. So everything we're doing we believe is the right strategy, even from this environment.

CR: You're saying all that but investors don't seem to believe you. Recently shares have fallen below 10 francs. What went through your head when you saw that?

TT: The shares did not reflect at all the value of the share price, the value of the group. I'm very confident that as we deliver on what we said we would do, the share price will go up.

CR: Can I just ask you about Brexit given that you've got massive operations in London? What exactly does Brexit mean for you, for Credit Suisse? Are you looking at reallocating jobs?

TT: Again, we had a plan here ongoing, so we are not changing our plan. Our plan has been to fundamentally reduce our footprint in London because a number of jobs are simply too expensive.

CR: But that was in place before Brexit?

TT: Absolutely. We took out eighteen hundred jobs in London since the beginning of the year, a lot of the savings we talk about are actually located in London. We have two major low-cost locations in India and in Poland, and we also have a platform in Dublin. As you know we transferred part of our prime services in Dublin, so we have many options - which is the situation you want to be in. Which is that you can pull many levers depending on how things evolve.

So the restructuring of London is underway and that is not changed by Brexit. Brexit has no immediate impact, honestly. London is a big financial centre, we have a lot of jobs in London. We're going to continue operating in London and as things clarify we will adapt our strategy, but in the short term we are continuing to implement our plans.

CR: We recently saw that many of the banks across the board have seen dramatic share price falls, not just your bank.

TT: Thank you for acknowledging that.

CR: What do you think is wrong with European banks and why would any investor at this point buy European banks over U.S. banks if they're doing so poorly?

TT: Well I think that you have to take a longer-term perspective. There are many pressures on banks. The negative interest rates have been a particular challenge - lower for longer. Another particular challenge, the regulation is a particular challenge. The key thing for me is to eliminate the uncertainty in the regulations so that investors can invest and have good visibility on what kind of capital we're going to need. So all the current conversations on what's coming after Basil III need to find a conclusion as quickly as possible. So I believe that business and capitalism is extremely adaptable and can adjust to any context. We can make the necessary transformations but it's very important that we have a stable and well known and predictable framework in which to operate


Sarah Whiteacre


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