Hi. I am Aaron Weinman. Credit Suisse wants to cut costs at its investment bank. Competing investment bankers are feeling the blood in the water as they hover around the business of their Swiss counterparts.
Now back to Credit Suisse.
1. Credit Suisse’s lackluster investment banking numbers and decision to reduce costs within the divisionhas rivals “dancing on their grave”. That’s how one capital markets banker described the mood of his colleagues, who were keen to snatch business from the ailing Swiss bank.
It’s a common textbook in the world of investment banking. Rivals – all clamoring for pitch meetings with US companies – are quick to point out competitors’ flaws. In the case of Credit Suisse, they will also remind companies of the bank’s exposure to risk management scandals involving Archegos Capital Management and bankrupt supply chain financier Greensill Capital.
“A big wealth management company with investment banking as a hobby. It’s very good for us. I think we’ll take some of them,” the capital markets banker said.
And this part is important. Credit Suisse has ranked among the top seven investment banks in the U.S. bond and loan markets for the past three years, while it was in the top 10 in the U.S. equity markets, thanks to a solid Company after-sales service in recent years, according to Dealogic data.
The investment bank, however, posted a loss of about $1.2 billion for the quarter, down 43% from the same period last year.
Like UBS, Credit Suisse has focused on growing its wealth and asset management businesses. The bank also announced that outgoing chief executive Thomas Gottstein will be replaced by Ulrich Körnerwho currently leads its asset management arm.
Körner – nicknamed “Uli the Knife” in This article by the Financial Times – helped reshape UBS after the 2008 financial crisis. Now he will seek to reshape a brand in need of a makeover and a company plagued by weaker numbers.
“The bank needs a seismic wake-up call,” said a Credit Suisse banker, who, when asked about Wednesday’s results, simply texted me back with tearful emoticons .
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