In a bittersweet swan song, the near-extinct major Swiss bank puts in a strong showing in investment banking in the first quarter, clearly outdoing UBS, its soon-to-be acquirer. finews.asia takes a closer look.
We likely have at least another two quarters to go until UBS’s acquisition of Credit Suisse is consummated. Until that time, Switzerland’s second-largest bank remains a separate entity.
That makes the rest of 2023 the as-if-nothing-ever-happened year. In the background, employees face innumerable and unfamiliar meetings, usually scheduled at short notice. Then comes the constant roller coaster of emotional ups and downs after each new wayward, public comment by someone ostensibly in the know.
Still, the bank itself is likely to continue to putter along, almost unthinkingly, with a few raised eyebrows and maybe an instruction or intervention from the new owners to its current management and board, who have in the meantime been reduced to little more than pro forma caretakers.
Outdoing UBS
As the nostalgia industry kicks into high gear, something finews.asia previously commented on, it is an ideal time to document what could have been for Switzerland’s second-largest bank while also speculating on the rough business profile of the new combined entity from 2024 on.
One area that Credit Suisse clearly outdid its parent-to-be was the Singapore investment banking market in the first quarter.
According to recent data from Refinitiv, it jumped to fifth in investment bank fees in the city-state, up from 18tha year earlier by raking in just over $11 million in fees, which was almost triple the level a year earlier (corresponding to a 294 percent gain). UBS, for its part, did not even make the list of the top ten.
Few Deals
In M&A, Credit Suisse placed third, up from seventh a year earlier, although this gain was had against an overall market that was down by well more than half. That fact was reflected in the value of the one transaction it advised on, prompting the value of the deal volume it advised on to fall 93 percent to $358 million.
UBS was shunted to sixth from fifth in the same period, also based on one deal worth $123 million.
Importantly, neither Swiss bank made the top ten in the equity and equity-related league tables, and they both dropped out of the city-state domiciled bond ranks when compared with the fourth quarter, as finews.asia previously reported.
Weakness in Bonds
That potentially suggests that the two banks have some work to do when it comes to fixed income from 2024 on, which has traditionally been a perennial Swiss weakness when compared with other significantly sized global institutions with strong private banking or wealth management franchises.
With fixed income again in vogue with investors after years of little to no interest rates and quantitative easing, that isn’t a particularly good look.
It potentially puts their ultimate product shelf selection and distribution at a long-term competitive disadvantage, particularly when compared with banks teeming with plentiful numbers of core affluent individual clients who are more than likely apt to take up each new issue out there, giving them a strong backbone to rely on.
As an example, HSBC ranked as the pre-eminent debt capital market book-runner in Singapore in the first quarter, followed by Societe Generale, Barclays, JP Morgan, and DBS.
Nowhere in Loans
That weakness was also mirrored in regional syndicated loan data, which was also recently released by Refinitiv.
Neither Swiss bank made the Asia (excluding Japan) mandated arranger loan league table, while HSBC placed third (behind Bank of China and Mizuho), OCBC 4th, DBS 9th, and Standard Chartered 10th.
By itself, that is more than likely to give someone in the combined strategy team plentiful food for thought for the years ahead - if it hasn’t already.
