Who killed the fixed income trading business at Credit Suisse? Some insiders at the Swiss bank think they know the culprit and it is not their own trading acumen.
"The responsibility for this mess lies with Christian Meissner," says one former MD in Credit Suisse's trading business. "He put his bet fully on the advisory division, which he understood because of his background. But he put the rest of the business to one side, and it resulted in reduced revenues, the exit of top players and a loss of $1.6bn in the first half of 2022."
Christian Meissner is no longer working for Credit Suisse and didn't respond to a request to comment for this article. He left the bank in July 2022 after joining as head of the investment bank in October 2020. An investment banker by trade, he spent 10 years at Goldman Sachs, where he became head of European equity capital markets before heading investment banking at Lehman, Nomura and Bank of America Merill Lynch.
Meissner may be an exemplary investment banker, but he has never been a trader, and he has never run a trading business. His detractors argue that it was under Meissner's reign, when Credit Suisse coincidentally combined its previously distinct investment banking and trading businesses under one umbrella, that the bank's best credit traders were neglected and then quit.
Those exits included Hamza Lemssouguer in late 2020, David Goldenberg in mid-2021 and a flurry of others (including Jonathan Moore, Kru Patel, Jonathan Fischer, Natarajan Rajendran) in 2022. At the same time, the bank has lost the big beasts in the securitisation business it now aspires to sell, with the exit, for example, of global head of securitised products Mike Dryden to Sixth Street in March this year.
The upshot is that fixed income sales and trading revenues at Credit Suisse fell 42% in the first half of 2022, while fixed income sales and trading revenue at Deutsche Bank rose 22%. While Credit Suisse is preparing a restructuring of its investment bank that's widely expected to focus the pain on its fixed income salespeople and traders, Deutsche Bank is busy praising its own traders for generating revenues at the top of its guidance for the year.
It's a substantial come down for a trading business that produced some of the best traders of a generation. Ironically, First Boston, the name that Credit Suisse may now resurrect for the rump of its investment bank, comprising mostly investment bankers rather than traders, was previously known as a credit trading house and not an investment banking boutique. Some traders who've left the bank in the past year had been there for decades. Although the bank stopped calling itself 'Credit Suisse First Boston' in 2006, their old CSFB emails still work today.
Not everyone agrees that Meissner is the culprit, however. For many, he was simply the final nail in a coffin lovingly constructed by the Swiss board. "Uhrs Rohner and the Swiss bureaucrats killed CS," says one former trader. "The death of the trading business started in 2015 when they got rid of Gael de Boissard and started losing the meritocracy. They kept mediocre people on, didn't cut where they should and didn't invest. Invest of promoting Gael or Jim Amine to head the investment bank, they then brought in an outsider who didn't know what to do."
Meissner never really had a chance, he says. "Bad management from the board and the chairman killed what was once a great meritocracy."
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