Morning Coffee: Credit Suisse and the only hot banking jobs in 2020. Demanding ex-GS banker ready to become CEO
If you're endowed with a good memory, you may recall the last Credit Suisse strategic plan. That was the plan which said the bank would cut 30% of its jobs in London over the next two years. That was two years ago (pre-even-the-whiff-of -Brexit) and has now been achieved. It's therefore time for something new.
Yesterday, CEO Tidjane Thiam sent a memo about the nascent plan, which will cover the years 2018 to 2020 and is to be presented this August after being delayed from June. Like John Cryan at Deutsche Bank, Thiam wants to bring "the fun" back to CS: in the new plan there will reportedly be less cost cutting and more emphasis on "value creation opportunities." If you work in the investment bank or global markets division, however, the fun might be hard to find. Bloomberg suggests only one area here will feel the heat of Thiam's enthusiasm between now and 2020: M&A.
This is because the plan will be all about emphasizing businesses which generate higher returns and are more capital efficient, and the M&A advisory business, along with wealth management and the Swiss private bank has already been identified by Thiam as fitting this description. Come 2020, the implication is that Credit Suisse will be lavishing love on its M&A bankers and their big returns.
It's not all bad news for the global markets division though. Here, Thiam is reportedly resisting pressure to make further swingeing cuts. Costs in global markets consumed 99% of revenues in 2016, but the division is due another $400m of cost cuts before the new plan kicks in in 2018. The global markets division at Credit Suisse is already very efficient at turning risk weighted assets (RWAs) into revenues: in 2016 it generated more than double the revenues of traders at Deutsche Bank and Bank and more than triple the revenues of traders at Bank of America for each dollar of RWAs. This was partly thanks to the low-key systematic market making group, which Thiam has also lauded for its capital efficiency.
If efficient use of capital is the strategic priority, then come 2020, Credit Suisse's investment bank might be a giant algorithmic trading operation with some M&A bankers on the side. Welcome to the investment bank of the future.
Separately, remember Matthew Westerman, the thrusting former Goldman Sachs banker who was causing upset at HSBC with his demanding working practices? He might become the overall boss. The Telegraph reports that Westerman is "in the frame" to replace Stuart Gulliver at CEO. Westerman's overhaul of the investment bank, with its redundancies, harsh year end reviews, and monitoring of what M&A bankers are up to exactly, has seemingly gone down well. HSBC employees can expect a lot more of the same.
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