For Credit Suisse bankers Singapore is better than Hong Kong
Sergio Ermotti is keen to welcome Credit Suisse Asia-Pacific-based bankers onto UBS’s platform once the merger completes, but the warmth of the welcome depends on where they are located.
The UBS CEO, who yesterday presented the bank’s first quarter results just two weeks after returning, said that Credit Suisse bankers have confidence in his strategy, but acknowledged that job cuts will be a painful part of the integration.
UBS cannot start the integration until the deal completes, which is scheduled to happen before the end of June, but Ermotti said yesterday that he will finalise his top team over the coming weeks and that in the initial stages, Credit Suisse and UBS will continue to operate as separate banks.
In the APAC region, Ermotti said the two banks have complementary strengths, with UBS strong in North Asia while Credit Suisse has a bigger presence in South East Asia. Sources say that could mean that UBS will remove overlap with staff in Hong Kong and mainland China, while looking to cherry-pick some of Credit Suisse’s best staff. “When you look at China, UBS is more of a boutique on steroids. It’s profitable, and I’m not sure they’d want to change that model,” said one banker familiar with its plans.
The biggest area of potential job cuts could therefore be in Hong Kong and mainland China, particularly given the lack of corporate finance activity during the first quarter. The prospect is forcing Credit Suisse bankers to look elsewhere, with a team of its corporate financiers said to be close to securing a move to a rival.
The question is who that rival is. “Credit Suisse has some strong bankers in Hong Kong, so there may be scope for a rival to upgrade, but no-one is really hiring at the moment,” said one Hong Kong-based headhunter.
The bank with the most appetite to hire in Hong Kong may be Jefferies, which is looking to add talent in APAC and has a reputation for counter-cyclical expansion. The US bank previously lifted members of Credit Suisse’s global financial institutions team and more recently its head of Italy, Andrea Donzelli. Last year, Jefferies hired David Biller from Citigroup as head of investment banking for South-East Asia. Biller has a mandate to build a team, but his remit means he could have a preference for Singapore-based talent rather than those working in Hong Kong.
In its APAC heyday under Helman Sitohang, who retired last year and was replaced by Singaporean Edwin Low, one of Credit Suisse’s strengths in the region was in lending to high net worth individuals within its wealth management division, with a particular focus on Sitohang’s native Indonesia. One former head of UBS’s APAC business says: “That’s a big difference with UBS. We were cautious on lending to these guys, but Credit Suisse always leaned in and made a ton of money from Indonesian tycoons. They were good at credit risk and we were good at market risk. I don’t see that business surviving because it consumes a lot of risk-weighted assets.”
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