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(Bloomberg) -- Credit Suisse Group AG’s biggest shareholder on Tuesday dismissed a proposal by a small Swiss activist investor to break up the country’s second-largest bank, saying the current strategy is beginning to pay off.

Swiss hedge fund manager Rudolf Bohli, whose RBR Capital Advisors has taken a 0.2 percent stake in Credit Suisse, has “hardly any skin in the game,” David Herro, who says his Harris Associates holds 9 percent of the Swiss bank, said by email. The current plan to turn around the bank is working and just needs more time, he said in a subsequent interview.

“You can’t turn around an aircraft carrier in a couple of months or quarters,” Herro said in the interview on Bloomberg TV. "I think management is doing a good job."

The Swiss lender two years ago started a restructuring led by Chief Executive Officer Tidjane Thiam, downsizing volatile trading operations and focusing more on managing money for the wealthy. Progress on boosting profitability has been slow and the shares have fallen by a third under Thiam. Bohli, whose firm manages 250 million francs ($256 million), is pushing for Credit Suisse to be split into an investment bank, a wealth manager and an asset-management business, according to people familiar with his plans.

Credit Suisse shares rose 1.3 percent at 11:29 a.m. in Zurich. Before today, the stock had risen about 10 percent this year as analysts and investors turned more optimistic that the cost cuts are bearing fruit.

‘Really Undervalued’

“The reason why the activist is going after this bank is that its really undervalued -- our view is that there is substantial upside here,” Herro said.

Herro’s firm has been invested in Credit Suisse shares for more than 12 years. The stock rose as high 87.39 francs in 2007, before the onset of the financial crisis, and now trades about 82 percent lower, at 15.66 francs.

Profit rose 78 percent in the second quarter as reduced expenses lifted the global markets business. The bank is scheduled to report third-quarter earnings next month and will update investors on the implementation of its strategy shift at an investor day.

“The businesses at Credit Suisse are too integrated and the bank is still undergoing a big restructuring program,” said Thomas Braun, a portfolio manager at BWM AG, which holds about 4.6 million Credit Suisse shares. “Everything’s possible, but is it reasonable and feasible?”

‘Cultural Subtleties’

Bohli declined to comment when reached by phone. In July, the hedge fund manager exited his position in Swiss asset manager GAM Holding AG after failing to rally enough shareholder support for his ideas, including ousting the CEO. After that exit, Bohli said in an interview that he didn’t plan on making a bank his next target because of the size and complexity of such firms.

On its website, the firm says its only investing in Europe, where it “understands the cultural subtleties” and looks for “local alpha” producing stocks. One of its funds, RBR European Long Short, has returned an average of 9.6 percent since inception in 2003, according to an investor update. That fund was up 15 percent through August this year, after losing 11 percent in 2016. In the update, Bohli wrote that Credit Suisse was a “misunderstood jewel” with an undervalued wealth-management business.

Read more: A QuickTake Q&A on activist investors

Gael de Boissard, former co-head of Credit Suisse’s investment bank, is supporting Bohli, the Financial Times reported, citing people briefed on the plan. De Boissard didn’t immediately reply to a request for comment from Bloomberg. RBR plans to announce its strategy this week at the Robin Hood investors conference in New York, the FT said.

“It’s a storm in a teacup,” said Andreas Brun, an analyst at Mirabaud Securities in Zurich said. “It’s rather laughable that Bohli could force a breakup of Credit Suisse.”

Investor Pressure

Swiss paper Finanz und Wirtschaft reported the stake purchase earlier Monday and said Bohli doesn’t want to act alone in his efforts.

“While we welcome the views of all our shareholders, our focus is on the implementation of our strategy and of our three-year plan, which is well on track and which we believe will unlock considerable value for our clients and shareholders,” Credit Suisse said in an emailed statement, declining to comment on any specific investor.

Earlier this year, Thiam bowed to investor pressure and dropped plans for a partial initial public offering of the firm’s Swiss Universal Bank. Instead, he raised more than $4 billion in a share sale as part of his turnaround plan.

Credit Suisse’s cross-town rival UBS Group AG once also became a target of an activist. Knight Vinke Asset Management, run by CEO Eric Knight, urged the bank in an open letter to to spin off its investment bank in 2013. Knight sold the stake in 2016, saying he was still concerned about the size of UBS’s investment bank, which had been scaled back but not separated.

(Updates with comments from fifth paragraph.)

--With assistance from Donal Griffin Nishant Kumar Francine Lacqua Cindy Roberts and Tom Keene

To contact the reporters on this story: Jan-Henrik Förster in Zurich at jforster20@bloomberg.net, Patrick Winters in Zurich at pwinters3@bloomberg.net.

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Christian Baumgaertel, Ross Larsen

©2017 Bloomberg L.P.

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