Late last year, we made the observation that Credit Suisse and Deutsche seemed to be competing for the same sorts of people. Both said they wanted to hire M&A bankers in sectors like technology and healthcare; both wanted to emphasize ESG; both wanted to strengthen electronic trading capabilities.
Four months later, guess which bank looks best-placed to recruit in 2021? Not Credit Suisse.
When Christian Meissner lands in his new job as head of Credit Suisse's investment bank in May, he risks commandeering a team burned by last year's reduced bonuses and suspicious that the $4.7bn (CHF4.4bn) loss related to Archegos Capital will deplete bonuses yet again in 2021. In yesterday's trading update, Credit Suisse said the CHF4.4bn charge will, "negate the very strong performance that had otherwise been achieved by our investment banking businesses" in the first quarter. This looks like an understatement: last year, Credit Suisse's investment bank generated income before taxes of CHF1.7bn on revenues of CHF9bn; the CHF4.4bn charge is enough to wipe out pre-tax income at Credit Suisse's investment bank for two whole years.
In the circumstances, anyone joining Credit Suisse at a senior level may feel inclined to ask for a guaranteed bonus (to the extent that they're still possible in Europe) before committing. Meissner may even want to extend Credit Suisse's COVID bonus payments to junior bankers further up the food chain and across to the trading floor in order to keep existing staff happy.
Things are rather different these days at Deutsche Bank. Deutsche also has a new head of its investment bank in the form of Fabrizio Campelli, who's taking on the role from CEO Christian Sewing. However, Campelli's new seat looks far more comfortable than Meissner's: Deutsche is in a comparatively novel position in its recent history of having paid very generous bonuses for 2020 and being in a strong position to hire. And it is absolutely making the most of this.
In the past six months, Deutsche has recruited a raft of directors and managing directors, mostly from rival banks, many of whom are joining imminently. They include: Guy Winkworth and Richard Blacker from Morgan Stanley for its London macro desk; Esra Turk from Barclays as chairman for the Middle East and Africa; Sebastian Pearce from JPMorgan as head of European high yield trading; Luis de Diego Yenes as a VP-level high yield strategist from Citi; Mark Garcia from Citi as an MD in technology investment banking in the U.S.; and Chris Leonard from Barclays as head of U.S. rates sales and trading.
This is what a virtuous circle looks like: success breeds high pay, which allows for high-level recruiting, which creates further success.
While Meissner - who fortunately had a good, long rest between leaving Bank of America in September 2018 and joining Julius Baer (briefly) in 2020 before moving to Credit Suisse - braces himself for his new role, Campelli is therefore taking the helm of Deutsche's investment bank at a fortuitous moment in its history. Campelli can cruise. But if further Credit Suisse bonus top-ups are not forthcoming, Meissner may need all his considerable charm to keep his new team motivated.
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