Credit Suisse ‘pruning’ Europe investment bank

Bloomberg

Credit Suisse Group AG is reorganizing its European investment banking and capital markets business and cutting some jobs, a move prompted in part by Britain’s decision to leave the European Union.
The Zurich-based lender will cover large, global companies domiciled in the UK through industry teams, Marisa Drew and Mark Echlin, who lead the bank’s investment banking and capital markets business in Europe, the Middle East and Africa, said in an interview. Smaller, U.K.-focused companies will be served by a newly formed advisory and corporate broking group in the country. Credit Suisse has been hiring senior bankers in the region over recent months, including former Deutsche Bank AG executive Hendrik Aslaksen and James Peterkin from Barclays Plc. Aslaksen helps handle some of the bank’s biggest clients, while Peterkin leads the oil and gas coverage for EMEA. Peterkin’s area will be part of a newly created infrastructure group after the overhaul in reaction to rising demand for such assets from investors, Drew and Echlin said.
The changes, prompted by the U.K’s June decision to leave the EU, come on top of a planned 6,000 job cuts this year as the Swiss bank aims to free up capital and expand its wealth management business in a broader restructuring. While the weakened pound has boosted returns in U.K. stock markets since the vote, investment banking clients across the industry have become more cautious as the exact ramifications remain unclear.
While no large-scale job cuts are planned, there will be some “pruning” in her region, Drew said, without giving a number. Financial News reported the revamp earlier on Thursday.
Credit Suisse, which is scheduled to release third-quarter earnings on Nov. 3, rose 0.1 percent to 13.58 francs at 12:59 a.m. in Zurich. The shares have dropped about 37 percent this year.
Investment banking and capital markets, led by Jim Amine, saw pretax profit drop to 135 million Swiss francs ($136 million) in the second quarter, from 145 million francs in the year-earlier period. Credit Suisse ranks third on deals announced this year in EMEA, after Goldman Sachs Group Inc. and Morgan Stanley, according to data compiled by Bloomberg.
Charles Donald and Jonathan Grundy, previously co-heads of U.K. investment banking, have been named to new roles. Donald will head the new U.K. advisory and corporate broking group, while Grundy will oversee the new infrastructure team in EMEA that combines oil and gas, transportation and energy. In addition, the bank named Vikas Seth global head of emerging markets, with responsibility for planning and coordinating investment banking and capital markets coverage. The goal is to better capture an increase in cross-border deals, Drew and Echlin said. While the refocusing of the U.K. business was influenced by Brexit, the other changes would have probably taken place either way, Echlin and Drew said.

Job cuts in equity trading unit
Credit Suisse Group AG is reducing some jobs at its cash-equities business, a person with knowledge of the matter said, as the Swiss bank extends cuts to an area it previously earmarked for growth.
The bank, led by Chief Executive Officer Tidjane Thiam, has eliminated about 20 jobs in cash equities, the person said, declining to be named because the matter is private. Employees in London and South Africa are among those affected, according to the person, adding that the cuts were motivated by cost pressures and adverse market conditions. A spokesman in London for Credit Suisse declined to comment.
While Credit Suisse accelerated cost cuts in March after unexpected losses on trading positions, the lender singled out cash equities as one of the businesses it was seeking to expand. The unit is part of the bank’s trading division, known as global markets, which has borne the brunt of this year’s bloodletting and is led by Brian Chin.
Thiam said last month that the bank had achieved 4,800 of 6,000 job cuts planned this year, part of an overhaul to free up capital and expand its wealth management business. The Zurich-based bank is also eliminating jobs at its investment banking and capital markets unit, another person familiar with the matter said, without elaborating.
Trading in equities across the market remained “muted” in the third quarter, while revenues in fixed income showed “positive trends,” analysts at Bernstein led by Chirantan Barua said in a note Wednesday, referring to results published by U.S. investment banks this month. Revenue from equities at Credit Suisse will drop 15 percent compared with the second quarter, according to their estimates. Bernstein has an under-perform rating on the stock.
Credit Suisse is scheduled to release third-quarter earnings on Nov. 3.