As Credit Suisse rebuilds in equities, its best traders eye Blackrock
2017 is a year of change for Credit Suisse's under-performing equities business. In Mike Stewart and Stuart McGuire (and now Michael Di lorio) the Swiss bank is bringing in three well-established, well-liked industry heavyweights to turn things around. But, as the cash equities business is given an injection of new leadership, Credit Suisse risks losing top traders in other areas to their former colleagues at BlackRock.
The most prominent among the latter is Tim O'Hara, the former head of Credit Suisse's global markets business. O'Hara left Credit Suisse suddenly in September last year and Brian Chin was appointed in his place. Last month, O'Hara joined BlackRock as head of global credit, with a mandate to boost the credit investing business at the world's largest fund management firm. He has company. Also at BlackRock is Philip Vasan, the former head of Credit Suisse's Americas private banking business and - more importantly - the architect of the Swiss bank's prime brokerage business. Vasan joined Blackrock last July, as head of investments and solutions for the wealth advisory unit, with a mandate to look at ways of combining actively managed mutual funds and index tracking products.
Credit Suisse insiders say O'Hara and Vasan represent the latest link between the under-performing Swiss investment bank and the thriving global money manager. BlackRock bought Credit Suisse's ETF business in 2013. Andy Stewart, a former head of liquid alternatives at Credit Suisse is co-head of BlackRock's alternative investing business. But while Stewart was only at BlackRock for three years, Vasan and O'Hara were CS lifers: the two men spent a combined 50 years at the Swiss bank. If anyone knows where the best traders and salespeople are buried at CS, they do. And most Credit Suisse traders would be only too happy to shift to BlackRock at a moment's notice.
"There's a close association between Credit Suisse and BlackRock now," says one senior CS equities banker, speaking off the record. "Anyone who can get a chance to move to BlackRock, will go," says a headhunter, speaking on a similar basis.
Both O'Hara and Vasan are based in the U.S. So far, there's little sign that they're eyeing up people at their ex-employer. Robin Ferrett, a former equity derivatives structurer at Credit Suisse in London joined Blackrock's quantitative finance business in San Francisco in October, but this looks like mere coincidence. Ultimately, if O'Hara hires from anywhere, it's likely to be from Credit Suisse's successful emerging markets or high yield businesses. If Vasan hires from anywhere, it's likely to be from Credit Suisse's equity derivatives business, although his focus on marketing to retail investors at BlackRock could preclude recruits with an institutional bias.
Credit Suisse's cash equities traders won't be joining Blackrock. Not only do they fall outside the scope of the two ex-CS lifers, but they've got a bad image in the market and are unlikely to be of interest. "Credit Suisse's cash equities business in London is mostly awful," says one equities headhunter. "It's the electronic trading business, run by Chris Marsh, where the strength is," he adds. Headhunters say Marsh's business has been well-looked after, but Mike Stewart may still need to offer reassurances when he arrives next month: Ksenia Ozdoeva, a VP-level electronic equity sales trader at the bank is understood to have recently quit for Bank of America Merrill Lynch.
For 'good' CS equities insiders, the arrival of Stewart, McGuire and Di lorio, each of whom is widely held to be exceptionally good and exceptionally personable, represents an opportunity to undo years of neglect. Stuart is the big, transformational hire: he's joining in June as global head of equities, based in New York. McGuire is expected to join in the third quarter as head of EMEA equities client execution strategy, based in London. Di Lorio is joining at the end of August, as head of EMEA equities, also based in London. Insiders say the Swiss bank is now aiming to be in the top five globally in equities. In the U.S. it's ranked around sixth, but in Europe it's fallen to eighth or even ninth.
"The strength in Credit Suisse's equities numbers always came from electronic side and the rest of equities at CS has been under-invested in for years," says one CS equities professional. "The worst time was in 2010 when Brady Dougan [the former CS CEO] decided to build out in fixed income. The equities floor was this low-ceiling dingy sort of place and Dougan created a big, high-ceilinged, fantastically decorated new fixed income trading floor and hired in hundreds of people - most of whom weren't even the best in the market. Bit by bit, the fixed income people then took over."
The balance of power at Credit Suisse won't change with three big equities hires - the whole global markets business will still be run by Brian Chin, whose background is in securitization. All the more so as Chin is orchestrating the current rebuild before Stewart arrives. Even so, Stewart, McGuire and Di lorio might help tilt things back to equities - especially if some of Credit Suisse's senior fixed income traders leave to work with O'Hara. This, quietly, is the hope.