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Credit Suisse's savior.

Morning Coffee: Michael Klein’s special power becoming apparent at Credit Suisse. Citadel hosts non-festive related giant staff party

If anyone has emerged as the winner from the Credit Suisse breakup, it's Michael Klein, the former Citi executive who will be both reversing his boutique M Klein & Co. into the spun out capital markets and advisory business of Credit Suisse, running the new CS First Boston, and receiving what the Financial Times previously described as a "substantial" shareholding in the process. 

As we've reported here before, Klein has a few things in his favor. He's polite and hard-working and the sort of person to see clarity and opportunity amidst uncertainty and dislocation according to an effusive former colleague. He's also on very good terms with the ruling elite in Saudi Arabia, and this is turning out to be a really great advantage both for Klein, for Credit Suisse, and for anyone who holds Credit Suisse stock in their bonus.

Following months of declines, Credit Suisse's share price rose 6% yesterday after the Wall Street Journal reported that Crown Prince Mohammed bin Salman (MBS) of Saudi Arabia is contemplating investing $500m in CS First Boston. Klein's personal involvement in CS First Boston 'opened the door' to this, said the Journal, noting that he's been a 'trusted advisor' to the kingdom for a while now.

It's not clear how MBS will invest his $500m in CS First Boston. But he could well do so through the Saudi Public Investment Fund. The PIF is also the main owner of the Saudi National Bank, which is also now the largest owner of Credit Suisse itself with a c9.9% stake in the bank after contributing CHF1.5bn of Credit Suisse's CHF4.05bn capital raise earlier this month.  

Klein has strong links with the PIF too. In 2017, for example, he reportedly advised the fund on its global investment strategy and advisory plans. In 2019, he played a key role in the IPO of Aramco, in which 2% of the company was floated and the proceeds moved to the PIF.  The PIF has also worked with Klein in relation to some of the SPACs he's been running in recent years. 

As Credit Suisse engages in a period of restructuring and CS First Boston ventures out on its own (an endeavor that could reportedly take up to two years), having someone on favorable terms with the custodians of a pool of capital worth $620bn is clearly a very helpful thing. In late October, the Saudi National Bank chairman said that he liked Credit Suisse's new leadership, even though the SNB was not ready "to go out and buy a European bank or something like that." With Klein around, he may one day change his mind.

Separately, Ken Griffin has been spending money on a party and it wasn't even for Christmas. Business Insider reports that to celebrate Citadel's 30th anniversary and Citadel Securities' 20th anniversary, employees of the two firms were treated to an event at Disney World and a Coldplay concert.

10,000 employees attended, of whom 2,500 were children. Griffin gave a speech. There were rides, there was food, there was singing, and KG reportedly paid for the entire thing himself. 

Meanwhile...

Things aren't going well in the SPAC market. $10.6bn of deals were cancelled in an hour this month.  (Bloomberg) 

Deutsche Bank is contemplating getting back into trading residential mortgage backed securities as it tries to maintain momentum in its fixed income trading business. (Bloomberg) 

European banks are buying their own CLOs in an attempt to keep the CLO market afloat. (Bloomberg) 

State Street, Pimco and Amundi are pouring money into digital investment platforms because they want to be like BlackRock with Aladdin. (Financial Times) 

Bankrupt crypto lender Celsius Networks has been allowed to pay $2.8m in bonuses to the 170 staff who are winding down to prevent them leaving. (Bloomberg) 

Crypto exchanges Bybit and Swyftx over the past two days said they’re laying off 30% and 35% of their staff. (Bloomberg) 

Five women are accusing hedge fund manager Crispin Odey of sexual assault over a 24 year period. He says the allegations contain falsehoods and inaccuracies. (SlowNews podcast) 

30,000 people watched this year's Excel world cup on YouTube. The competitors were mostly finance bros, data analysts, mathematicians, actuaries, and engineers. There were very few women. (The Atlantic) 

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AUTHORSarah Butcher Global Editor

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