Credit Suisse’s Hong Kong bankers deserve some love

Here is the pitfall of working at a multinational. Calamities elsewhere, such as bad business decisions made thousands of miles away, can lead to major overhauls across the board, sapping growth prospects everywhere and denting employee morale.
This is especially true now at Credit Suisse Group AG, whose new management team promised to unveil an emergency strategy review later this month. Drastic options are on the table, including a large-scale investment banking retreat, a sale of its securitized products business — and, of course — a lot of layoffs to cut costs.
In Hong Kong, one of the Swiss bank’s profit centers for years, its worker bees are not happy. Job cuts began in the summer, with some client-facing roles within the Greater China investment banking business slashed. Meanwhile, at its crown-jewel wealth management division, which services Asia’s high-net-worth individuals, Credit Suisse is struggling to halt the departure of its top bankers.
One can’t blame private bankers for abandoning ship. Amidst all the turmoil, this year’s bonus pool is likely to shrink further. Unlike some US peers where private bankers are paid a percentage of the revenue they generate, Credit Suisse’s bonus payments are discretionary. A bonus pool is determined at the global level, and cascades down to regional offices, team leaders, and client-facing relationship managers.
As a result, private bankers’ payout ratios can vary from person to person and year to year. Some may not get to eat what they killed at all. Throw in that some of the bonus is paid out in Credit Suisse shares — which have lost half of their value this year — and bankers may not even wait for compensation season before heading for the exit.
Perhaps the talent exodus is a wake-up call for those in Zurich. Asia has been an important profit center for the Swiss bank. Between 2016 and 2020, the region contributed one-third of the profit growth in its wealth management division, and 48% cumulative growth in invested assets, according to HSBC Holdings Plc. Credit Suisse’s star region has no shine without its diligent bankers in Hong Kong.
Now Credit Suisse may point to the China slowdown and say that Asia is not the only game in town – North America, for instance, is churning out a lot of new wealth. That would be a flawed argument. New business opportunities emerge even as China pursues big business crackdowns. For instance, family offices in the mainland are now keen to open branches in Hong Kong and Singapore and diversify their wealth into assets abroad.
In addition, one may argue that Credit Suisse’s two big divisions in Asia — investment banking and wealth management — complement each other. Private clients from China get rich by taking their companies public; they are also avid investors in their personal wealth. Here in Asia, investment banking is as big a profit contributor as the wealth management business, according to HSBC.
—Bloomberg