It’s been going on for a while now, but following last week’s restructuring announcement and Michael Klein’s promotion to the role of CS First Boston head, headhunters say many Credit Suisse bankers have gotten really excited.
“People are interested in seeing how much stock they can get in a spinout,” says one London headhunter. “Nobody’s going anywhere until that becomes clear.”
Speaking at last week’s announcement of the new plans, CEO Ulrich Körner noted that CS First Boston could make some of its employees very rich, and not just Klein himself, who gets a “huge stake” in the venture according to the FT.
The new bank will be able to reward all employees through a partnership model, CEO Ulrich Körner said. “It will be more global and broader than a boutique, more focused than a bulge bracket player,” he added. The proposal is already generating excitement among “talents” Körner added.
That people are excited is a good thing. But there is also a lot of uncertainty surrounding the new structure. Credit Suisse cut 2,700 jobs before Christmas, and most of the cuts are expected in European corporate finance. Körner stated last week that CS First Boston will withdraw from European ECM and DCM and focus solely on M&A in EMEA. One European capital markets hunter said bankers at Credit Suisse in London seemed strangely unfazed by the prospect: “It’s great, there’s no panic. Everyone wants to know the details of the spin-off and they all seem to think they’re going to get a lot of stock options.”
Credit Suisse bankers are “always overly optimistic,” he added. “I’m pretty sure that panic will come.” A US headhunter who tried to relocate Credit Suisse employees for a while complained even before the announcement that they would be “delusional:” “None of them thought they would be affected by the restructuring.”
Credit Suisse bankers are now more bullish than Goldman
One result of the current situation is that headhunters say bankers at Credit Suisse have become harder to move than bankers at Goldman Sachs.
“At Goldman we’re seeing more and more senior bankers making soft inquiries about the way to the door,” said Barney Mundell, partner and co-founder of search firm Loxley Partners. Goldman’s banks are concerned that the next 24 months will be “flat at best,” Mundell said. If they move soon, the Goldmans may be able to lock in bonuses at last year’s highs. Hence their eagerness to collect bids from the market.
Opponents of CS First Boston
While CS First Boston is the shiny new guest at the banking party, some insiders at Credit Suisse are already expressing skepticism. After losing 69 senior bankers last year, followed by Jens Welter, the London-based co-head of global investment banking to Citi in September, skeptics suggested the new bank would start life with some of Credit Suisse’s best people out.
The new managing director may want to
Credit Suisse declined to comment for this article, but the bank has already hired. – In June, David Miller, who heads investment banking and capital markets at CS, said the bank had added 55 MDs since last year’s exodus. Still, detractors say the business that will soon become CS First Boston still appears too focused on financial sponsor coverage and leveraged finance and lacks broad strength across M&A. “This is a bunch of leveraged financiers and bank sponsors masquerading as M&A bankers,” said one senior insider, speaking off the record. “The idea that it’s going to be capital light is kind of ludicrous.”
Dealogic said CS was outside the global top 10 for technology M&A, healthcare M&A and real estate M&A for the first nine months of 2022. More promisingly, the Swiss bank ranked eighth for utility and energy M&A and recently won an advisory role on a $24.6 bn agreement between US grocer Kroger Co and Albertson’s. It also ranked 7th for global M&A and ECM. In leveraged finance, however, it is in fifth place, an achievement that may prove a poisoned chalice because of sour leverage deals. The bank had already been hit by a $120 million write-down on leveraged loans in the third quarter.
Maybe the gap in the M&A league table doesn’t matter. Last week, Körner said the new bank would not pursue positions. Four months ago, however, Miller said he still wanted to hire 40 new MDs around the world, primarily in technology and health care, possibly to fill those vacancies.
Ultimately, insiders say CS First Boston is more likely to be Jefferies than Centerview or Evercore. The new firm will apparently run a corporate finance and leveraged finance business in the US and Asia, but a purely advisory business in Europe. It might also pay like Jefferies, with plenty of cash for junior staff but hard claws for anyone who leaves.
Although CS First Boston will be based in New York, Klein himself has strong ties to the Middle East. When the new bank is hiring, bankers looking to build ties to Saudi Arabia may be among the most eager new recruits.
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