Is Credit Suisse's market leadership in its home market wobbling? The pecking order in Swiss investment banking has recently been shaken up. Business with local companies is in high demand.
The announcement raised eyebrows in Swiss investment banking. The largest US bank, J.P. Morgan, recently announced that it had overtaken market leader Credit Suisse on its home turf country, based on 2022 fee income across the entire spectrum of investment banking services.
Credit Suisse immediately disputed JP Morgan's claim to first place to finews.com, calculating that it still held the lead.
A Sensitive Topic
Investment bankers are very sensitive about the internal pecking order within the industry on so-called league tables. In such a performance-oriented profession, rankings are associated with a great deal of prestige, and no one likes to see themselves relegated. However, the data which traditionally comes from the analytics firm Dealogic can be massaged for a particular purpose. «I can immediately put together a league table for them, where my bank is the best,» an industry veteran tells finews.com on the condition they not be named.
The supposed relegation of local hero Credit Suisse fits the picture that its investment bank presents globally. The unit which is producing consecutive high losses is now being restructured and scaled back under Group CEO Ulrich Koerner. The corporate advisory and capital markets business, where the bank is the leader in Switzerland, will be sold abroad to third parties as CS First Boston, involving painful job cuts. Long-serving executives are not waiting around to see what will happen and left the investment bank in droves in recent months.
Global Slump
Global revenues in the industry have plummeted, according to a new global estimate published by the «Financial News» (behind paywall) portal. Fee income at Credit Suisse has fallen by more than 58 percent compared to 2021, to $1.8 billion, meaning the Swiss bank has lost more than any of its other top competitors. To be sure, the Credit Suisse results are not to be seen in isolation, as other institutions are also bleeding. Along with JP. Morgan, Wall Street firms Citigroup and Morgan Stanley saw their revenues halve compared to the previous year.
In an extremely difficult environment, Goldman Sachs, Bank of America, and Canada's RBC were the best performers, according to the report.
Nevertheless, industry insiders by no means see the Credit Suisse investment bank in Switzerland retreating. «Chief executive Jens Haas will do everything he can to maintain the position,» says the source. In general, it is counterproductive to distinguish oneself at the expense of the competition, because local investment bankers repeatedly work together on syndicated transactions where several financial institutions are concurrently involved.
Getting Satisfaction
As a result, the parties involved are in almost daily exchange with the competition to deliver a favorable deal for the client. And when the clientele is satisfied, more fees percolate into the coffers of the banks.
The incentive to cooperate is also evident in the recent capital increase of Credit Suisse. In addition to Credit Suisse itself, 19 institutions guaranteed all newly issued shares would be sold, including practically all investment banks active in Switzerland. Since the bank's condition made it a high-risk deal, all participants in the transaction probably earned a lot of fees.
