The unwelcome guests at Tidjane Thiam's Credit Suisse party

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Most people quite like working at Tidjane Thiam's Credit Suisse. During today's (ongoing) 2018 Credit Suisse investor day presentations, Thiam presented the results to a recent survey which said 88% of Credit Suisse employees would recommend working for the bank to their family and friends (compared to an industry average of 77%). A similar proportion said they feel motivated to, "go above and beyond at work" (compared to an industry average of 72%). Take that, haters.

Thiam didn't say so, but it seems possible that the 5,500 people who don't think Credit Suisse is great are disproportionately to be found among the 11,250 people in the bank's global markets division, and in fixed income trading in particular. While the rest of the bank is having a ball, Credit Suisse's fixed income professionals are being left in the corridor.

The extent of the freezing-out is illustrated in the agenda for the investor day, which is disproportionately about wealth management. To the extent that the global markets or investment banking division are mentioned at all, it's mostly in relation to the wealth management business or as difficult children to be 'managed across the cycle.' Thiam's distrust of the fixed income side of the sales and trading business is implied by the inclusion (twice!) of a slide depicting declining credit and macro trading revenues across the market since 2012 in his own presentation.

Accordingly, the global markets business has seen the biggest cuts under Thiam's tenure, with costs of CH1.2bn taken out in three years. By comparison, APAC wealth management, the CEO's darling, has seen costs rise CHF300m over the same period.

The cuts have taken their toll. In 2015, the markets business contributed 39% of profits at Credit Suisse; this year it's expected to contribute 10%. Revenues in global markets are down 35% in two years based on performance in the nine months of 2018. Thiam's own (repeated) charts reflect the extent to which the decline at Credit Suisse is an anomaly - across the market as a whole, credit and macro trading revenues are only expected to be down 9% over the same period. The CS markets business has been hobbled.

It's not the whole of CS markets that's out in the cold. Thiam has high hopes for equities sales and trading. Following the addition of 50+ people in equity derivatives and 10 senior research analysts, the bank's equities division is expected to increase revenues in the next three years (on the back of what looks like a peak across the market in 2018). However, CS credit and macro traders are less lucky and are barely mentioned today. The slimmed down global markets division is most enthusiastically referenced in relation to ITS (International Trading Solutions), a cross-divisional product manufacturing and distribution platform for wealth management and institutional clients.

Is this strategy the right one? As Bloomberg pointed out earlier this week, Credit Suisse stock has fallen 50% during Thiam's tenure and is the second-to-worse performing European bank stock this quarter of 39 tracked by Bloomberg. Not everyone is convinced.

While Credit Suisse is determined that fixed income trading is a hiding to nothing based on the retrospective revenues earned since 2012 , J.P. Morgan and Goldman Sachs are both chasing growth. "The fixed income wallet will double and pretty much, everyone everywhere wants to enjoy some of that," declared Marianne Lake, J.P. Morgan CFO in October 2018. "It's a pretty good future outlook [for fixed income]," said Jamie Dimon - adding that "you run that business to capture your share of that doubling," as margins come down and electronic trading rises. Goldman Sachs is going after an additional $1bn in fixed income trading revenues, of which it already claimed to have secured $300m last month. 

Today's investor day presentations are unapologetic for the decline in Credit Suisse markets revenues. Thiam may yet be vindicated if CS stock rises and Goldman Sachs decides to jettison its own fixed income aspirations in the New Year as part of its current business review. Even so, cost cutting need not equate to revenue shrinkage - Morgan Stanley's fixed income business has thrived ever since CEO James Gorman heavily pruned it in 2015, and Gorman now says it has "great potential." Credit Suisse's business has shriveled over the same period and looks increasingly like the enfeebled appendage of wealth management. This may be what Thiam wants, and it may be making most Credit Suisse employees happy, by people in the global markets division can be forgiven for thinking that it didn't need to be this way - whatever is said in today's presentations.

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