Following a series of changes at Credit Suisse's trading arm, has the Swiss bank's problem child stabilized itself?
The surprise hire at the end of 2016 was a coup: Credit Suisse poached equities veteran Mike Stewart off crosstown rival UBS, where he had most recently been responsible for investment solutions in wealth management. His job at Credit Suisse? Help the Swiss bank's troubled global markets arm to right itself.
More than two years in, Stewart quietly handed over the role to Paul Galietto in May (Stewart continues to work for Credit Suisse). The move symbolizes a mission accomplished for Credit Suisse: and for Brian Chin, head of the wider markets division since 2016.
Trading Tie-Up
The unit topped analyst estimates in the first half, after several years or somewhat irregular revenue and profits. The second quarter was especially pleasing for Credit Suisse: while rivals suffered a drop in revenue, the Swiss bank's income from debt instruments climbed 12 percent on the year, while equities edged 4 percent higher.
The surprisingly buoyant first-half showing from Credit Suisse was driven by wealth management. CEO Tidjane Thiam underscored his satisfaction with a unified trading platform under Yves-Alain Sommerhalder by expanding the veteran trading executive's purview to Asia.
Revenue Surprises
Last week, Thiam emphasized that the new tie-up between markets and wealth management – international trading solutions, run by Sommerhalder – had given equities revenue a fillip. In December, Credit Suisse said it aimed for an additional $300 million to $4o0 million from the plan – which translates to a 20 percent bump on 2018.
If Thiam's prediction comes true, Galietto's unit will outpace competitors next year as well. This would tick off one of the last remaining open restructuring points on Thiam's three-year plan for Credit Suisse. The markets unit has repeatedly surprised investors with major losses or volatile swings.
Volatile Markets
To be sure, a glance across Paradeplatz will show that two quarters don't make for a sustained recovery: UBS long relied on its trading arm of its investment bank to smooth rockiness in its private bank.
Doing so is a dangerous game, as the last 12 months have repeatedly shown. Even if Credit Suisse can successfully complete the trading revamp, it still needs markets to play along.
