Credit Suisse’s ambitious hiring spree in Asian private banking – announced only last October – has already began in earnest, its annual results reveal.
The Swiss firm recruited 70 relationship managers (RMs) in Asia last year – as its RM headcount rose from 520 to 590 – and an impressive 40 of these new hires were made in the final quarter.
It’s all part of the bank’s plans to add more than 270 RMs in Asia by 2018 as CEO Tidjane Thiam focuses on capturing more revenues from wealthy Asian entrepreneurs. As we pointed out in October, talent shortages in Asian wealth management and the difficulty of convincing clients to move firms with their bankers makes this a tough target. Still, it appears Credit Suisse has got off to a flying start.
The 13% year-on-year increase in Credit Suisse’s Asian RM workforce contrasts to 1% headcount declines in its Swiss and international private banking units (which also suffered falls in net revenue) over the same period and shows that the firm’s pivot towards Asia is taking shape.
On the back of its Asian RM recruitment, compensation and benefits expenses at Credit Suisse’s private bank in Asia rose 15% to CHF522m ($524m) in 2015 compared with CHF455m ($457m) in 2014. The figure includes all staff in the division – the firm does not break out compensation costs just for its RMs.
Meanwhile, net revenues in Asian private banking at Credit Suisse rose 14% year-on-year, although this would have been generated by longer-standing employees – even the best new RMs take several months to start improving their revenue performance after the inevitable client loss of moving banks. But the pressure will be now be on the new hires to perform in 2016 as Credit Suisse looks to ensure its increased headcount brings in more client assets.
Crucially, at time when rising staff and compliance costs mean smaller private banks are often struggling to make money in Asia, Credit Suisse’s cost/income ratio was a fairly healthy 69.3 in 2015, a marginal improvement on 69.7 the previous year. Its RMs will be thankful not to be facing the same profitability pressures that are making some of their counterparts consider leaving the industry.
It's more mixed in investment banking
If you work in investment banking at Credit Suisse in Asia, you’ll have learned to except the mantra that your division essentially now serves the needs of the private bank and its business-owning clients. But your results will make mixed reading – net revenues slumped 18% in underwriting and advisory, and 7% in fixed-income sales and trading.
Credit Suisse notes a decline in its business from mergers and acquisitions (M&A) and initial public offerings (IPOs), however across the market 2015 was a record year for Asia Pacific (ex-Japan) M&A, according to Dealogic. Equity capital markets volumes in the region were also up 11% on 2014.
If you’re working in equities sales and trading at Credit Suisse in Asia, however, you bucked market trends in a good way and (probably) ensured your job is secure in 2016. Net revenues in your team are up 35%, even as rivals such as Barclays, Deutsche Bank and Standard Chartered continue to axe jobs in Asian equities. The strength of the Credit Suisse's equities performance helped overall IB revenues to rise 16%.
eriktham, iStock Editorial, Thinkstock