Credit Suisse taken over by management consultants and equities honchos
There are some definite trends when it comes to high level promotions in investment banks. In the markets businesses, fixed income people are out; equities people are in. Overall, the management consultants are taking control.
Credit Suisse's reshuffle marks the latest manifestation of both moves.
Gael De Boissard, the fixed income-focused co-head of Credit Suisse's investment bank with the shampooing wife, is out. Henceforth, Credit Suisse's entire markets business will be run only by Timothy (Tim) O'Hara, former global head of equities.
Beyond Credit Suisse's investment bank, management consultants are ascendant.
Tidjane Thiam, CEO since June, spent eight years working for McKinsey & Co and clearly has a thing for other people with a consultancy CV, particularly in his pet area of private banking. Hence, Iqbal Khan, a former EY consultant hired by Credit Suisse in 2013 is moving up to the executive board and being handed responsibility for global wealth management. And Pierre Oliver Bouee, a former colleague of Thiam's from Prudential and McKinsey is being made chief operating officer for the whole bank. Meanwhile, established head of the private banking business, Hans-Ulrich Meister and Robert Scott Shafir, are being shown the door. Thiam is reshaping the private bank in his own image.
Credit Suisse isn't the only investment bank to succumb to consultants. James Gorman at Morgan Stanley is an alumnus too and consultants from the firm are reportedly 'swarming' over HSBC, albeit on a contractual basis. Dispassionate strategizing is now at a premium.
Nor is Credit Suisse's markets business the only one now led by equities professionals. As of this week, Deutsche Bank's fixed income colossus is now lead by its equities shrimp. And earlier this month, Morgan Stanley promoted Ted Pick, former head of its equities business, to head of its entire global markets business.
What makes equities professionals so popular? Headhunters suggest it reflects the shallowness of the fixed income talent pool after years of cuts, but it might also have something to do with the fact that fixed income businesses are doing atrociously (year-on-year, the revenue decline in Credit Suisse's 'strategic' fixed income business was 42%, while equities revenues rose by around 20%). As fixed income trading goes electronic, equities professionals who've already marshaled the electronic shift in that market, are also popular.
Should Credit Suisse's fixed income professionals fear Tim O'Hara?
Do Credit Suisse's fixed income traders have much to fear from their new boss?
Maybe, but not as much as you might expect. Thiam said this morning that up to 2,000 jobs will go from Credit Suisse in London. That's nearly 30% of the total in the City, but only 200 of the cuts are likely to affect front office staff. As Thiam's new-style bubble chart from today's presentation suggests below, those most at risk appear to be in rates (macro), prime services (PS), and so-called 'leverage products' or derivatives and securitized products (SP).
Source: Credit Suisse
Meanwhile, headhunters point out that O'Hara isn't the dyed-in-the-wool equities professional that he appears to be. Before becoming head of global equities at Credit Suisse in 2012, he was head of North American fixed income and global head of credit products for the bank. Maybe he'll be gentle with CS's fixed income professionals after all?