To retain investment banking talent and contain costs, the Board of Credit Suisse is said to have raised the idea of an equity stake for top deal makers.
At a global townhall meeting last Thursday, the idea was floated to senior investment bankers by Michael Klein and Blythe Masters according to a «Bloomberg» (behind paywall) story on Friday citing people familiar with the matter.
Short on Details
According to the story, it appears that only the broad strokes of a proposal were discussed, and it is not known how seriously it is being considered. At the same time, details were not provided, and a spokesman declined to comment, according to «Bloomberg.»
Earlier this year investment banking co-head David Miller said in a townhall that the aim was to transform the unit to become «capital-light» and «advisory-focused», as finews.com reported.
Retaining Talent
After having lost over 60 senior investment bankers in two years despite awarding $1.3 billion in retention bonuses and awards to stem the exodus, the idea is that offering the bankers a direct stake in the unit will keep them in place. Such a structure would reduce the share of future dealmaking profits and could also leave bankers with less incentive to help other units, according to the story.
Last week in Singapore, Credit Suisse's board of directors met to discuss the firm's strategic review, with an ad-hoc committee comprising board members Klein and Masters, along with Mirko Bianchi and Richard Meddings considering the future of the investment bank, «Bloomberg» said. Some of the options are said to include a spinoff of the unit or much of it being put up for sale.
Swiss Investment Bank
For its part, Credit Suisse's Swiss investment bank is doing just fine, thank you. Despite the aforementioned rumors of a sale or spinoff, Credit Suisse's investment banking unit still has the biggest wallet in Switzerland.
Through the first half of the year, Credit Suisse maintained its leadership position in Switzerland's investment banking market, capturing 14.2 percent of the banking fee pool, or «wallet», maintaining its lead over its closest rival UBS with 9.7 percent, according to figures provided by Credit Suisse at a media roundtable on Friday, as finews.com reported.
At just about every media event when asked about any update on its strategy, Credit Suisse reiterates that an update will have to wait until it releases its third-quarter results on October 27 when it will also provide an update on the strategy.
With all the news surrounding the bank since its disastrous second quarter results and Ulrich Koerner's taking over as CEO, Credit Suisse watchers are no doubt thinking «I don't wanna wait in vain», to quote Bob Marley, for the strategy update.
