Following the Archegos debacle, Credit Suisse scaled back its services for financial investors and passed them on to its competitors. The Swiss bank's withdrawal from prime brokerage is now shaking up the market.
The gap left by Credit Suisse in its hedge funds and institutional investor business will not remain filled for long. As reported by the agency «Reuters», since the beginning of the year distribution battles have begun for the approximately 1,800 clients that the second largest Swiss bank served in this business.
According to the news outlet, Credit Suisse's top clients included such big US names as Blackrock, Blackstone, and hedge funds Bridgewater Associates and Millennium.
Once a Big Player
Credit Suisse was a big player in this segment for years. Among its European competitors, it was the largest provider of prime brokerage services, while ranking fifth globally.
Because of the debacle involving New York-based financial firm Archegos in March 2021, however, Credit Suisse suffered a $5.5 billion loss in the investment banking business. The Swiss Financial Market Supervisory Authority (Finma) subsequently imposed stricter risk requirements on the bank, which noticeably slowed down the business. In November, Credit Suisse officially declared it was exiting the business.
European Competition
That same month, an agreement was reached with BNP Paribas to pass on prime brokerage clients to its French competitor, as finews.com reported. BNP Paribas is now on the move, with the French bank looking to take Credit Suisse's place as Europe's leading investment bank, having risen from ninth to sixth in the global rankings by the number of clients at mid-year.
Barclays is also in the fray, recently coming in fifth place among global prime brokerage providers.
US Banks Strengthened
Among the US banks on the podium are Goldman Sachs, Morgan Stanley, and J.P. Morgan, in that order. The leading «gold men» have been able to take advantage of the exit of their Swiss competitor, increasing the number of customers by 9 percent between June 2021 and June 2022.
To be sure, while US banks such as Goldman Sachs were also affected by the Archegos bankruptcy, its effects have helped cement their investment banking supremacy.
