P4Capital is beginning a series of Podcasts and interviews featuring our executive team, who will be discussing pressing concerns for the Canadian financial industry.
This weeks topic, Credit Suisse and their recent reshuffling at the top.
Amanda: It’s that time again listeners, another round table discussion with the P4Captial team located here in Downtown Toronto. My name is Amanda Portelli, I am your host, and I am once again sitting here with our executive team. Today’s topic, Credit Suisse and they’re recent reshuffling at the top.
Jim: My name is Jim Carlson, I’m a partner in the firm and have been interested in working the Capital Market scene for the last 30 years
Archana: Hi, my name is Archana Ravinder. I’m an Account Manager with P4Capital.
Jeremy: Hi Jeremy Paczuski here, Client Executive with P4Capital
Shaheerah: My name is Shaheerah Kayani, I’m an Associate Recruiter with P4Capital.
Jim: The topic today is Credit Suisse, has made a major reshuffle at the top of its executive food chain. And, it could be one of two reasons – either regulatory reasons or more importantly we think, maybe a business reason. First, lets define Credit Suisse. Credit Suisse, is a historic private banker of Swiss claim and fame. And is looking at expanding investment banking opportunities a la what we discussed of Goldman Sachs position in the marketplace last week.
Archana: Credit Suisse is Switzerland’s second largest bank and, the recent move is seen as the bank trying to adapt business to the new market and regulatory conditions
Shaheerah: The bank has had three changes in their management team. The first change being that the two managing directors from the investment bank which are Jim Amine and Tim O`Hara, they have now joined the banks executive board. The second change is that Helman Sitohang is now the CEO of the Asia-Pacific region, and the third and final change is that Eric Varvel is now leaving the board, but he is now the chairman of the Asia-Pacific and the Middle East Regions
Jeremy: It seems that Credit Suisse has had a renewed focus on the Asia pacific market. This is right after coming on the heels of the IPO for Alibaba where they earned 25 million dollars in fees, on that deal alone. I think they did about 850 million in that region on similar fees as well over the past year.
Shaheerah: As Jeremy said about the Asia pacific growth that they’re seeing, in the second quarter the banks wealth management assets in the Asia-Pacific boast 15.8%, that’s double the rate they have in Switzerland and almost triple the rate they have in the Americas region. That’s the reason that they really want to capitalize and strategize on Asia-Pacific growth that they’re seeing.
Jim: Which, if one look sat the next wave of wealth coming into the marketplace, the Asia pacific theatre is right in front of us. The wealth dwarfs a lot of what’s in Europe and the Americas, and it’s basically an untapped source that’s been the domain of the old Scottish Anglo bankers that set forth in Hong Kong 300 years ago. Now, others in the world are looking at the lucrative fees that can be generated at it, looking at just the overall wealth. So we say to ourselves is Credit Suisse taking a bold first step into being the new preeminent lender and banker for the 21 century in the Asia-Pacific.
Archana: What’s interesting is the bank has actually, this year, had a lot of success in the high fee paying business of US listed China IPOs, and in fact Credit Suisse was involved in 10 out of the 13 China US IPOs that went to market, including to what Jeremy just pointed out the, Alibaba deal.
Jeremy: I think what’s drawing their efforts into the Asia Pacific market is the fact that UBS and Credit Suisse, the two Swiss banks have long kinda been considered a safe haven for offshore funds, and all the tax evasion that goes along with that. The US recently introduced a regulation called FATCA, Foreign Account Transaction Compliance Act*, I think that’s it. Whereby the IRS is requiring all foreign banks to report holdings and interest earned on foreign bank accounts. There’s probably been a major outflow of funds from Americans, and they’re looking to beyond traditional markets. As Jim mentioned the Chinese economy is just booming, there’s a huge source of wealth there.
Shaheerah: According to insiders, 25-30 percent of the banks revenues each quarter actually come from the emerging markets. At while at other international firms it’s only like 10-15 percent. The bank has supported that global private wealth will grow 40 percent in the next four years. More than a quarter of that growth will be coming from the emerging markets.
Archana: So far we’ve been discussing the role that Asia pacific region is sort of playing in the banks future, but bringing the discussion back to the actual recent reshuffle that happened within the senior management. There are two schools of thought here essentially, Jim Imemin and Tim O’Hera will essentially be heading up the executive board of the investment banking division because recently Credit Suisse has seen a lot of growth in this specific area, which is the investment banking area. And Credit Suisse going forward, wants to in fact amalgamate the two business which is the private banking business with the investment banking business because they think they would be able to sort of capture more fees from this booming business. The other school of thought is obviously that this might be more of succession planning that they are trying to put in place for the CEO Brad Doogan who has been there with the bank for the last seven years. In fact there was a lot of call for him to step down after Credit Suisse was fined 2.6 billion by US regulators early this year.
Jim: Which in P4Capital, we view as part of a major event in the global community that we can serve. Effectively, the succession planning came to the table and said we’re going to replace an American with a non-American, back to the roots of Credit Suisse. We’re not going to be held hostage by the IRS and its FATCA regulations. And at the same time, we’re going to be able to take a lead position in global market that’s experiencing 35 to 40% growth in the next couple of years. So in one fell swoop, the chains are positioning in the market from being a player of repute in the European American theatre, to now being a leader in the European Asian Pacific theatre.
Archana: The recent move with three reputed senior investment banking professionals sort of occupying the chief positions at this big investment bank, some of the industry followers are thinking maybe it’s just getting too crowded at the top. People who are sort of closely watching all this move are in fact even thinking a fallout would be the next imminent step. Morgan Stanley went through a similar sort of debacle where they had two co-heads and basically there was a fall out.
Jeremy: Will Credit Suisse new shuffling at the top be a Suisse hit or a Suisse miss. Only time will tell.
Amanda: That was the P4Capital team talking about Credit Suisse and their recent reshuffling at the top. Stay tuned next week for another edition of the P4Capital round table discussions. Want to know more? Check out our website at http://www.planet4it.com P4Capital, helping you reach velocity quickly. See you next time.
*Jeremy called FATCA the Foreign Account Transaction Compliance Act – it is in fact the Foreign Account Tax Compliance Act