Credit Suisse’s staff retention woes

Credit Suisse’s branch building in Geneva. Picture: AFP

Even before the meltdown of its share price, a tough job for Credit Suisse has been convincing its equities sales, distribution and research staff to stay with the bank ahead of its investment banking demerger that was slated to happen by 2025.

Already, Credit Suisse telecommunications and media analyst Entcho Raykovski has recently departed to join broker E&P and others are believed to also contemplating a move amid the uncertainty.

Last year, Credit Suisse’s Australia head of equity sales, David Buttenshaw, resigned to join Aitken Mount Capital Partners two days before the bank announced a global restructure.

The global demerger plan was announced in October as part of an overall restructure of the bank’s entire global operations and the aim was to have spun out the investment banking arm within three years.

Yet now everything is up in the air after Credit Suisse shares fell last week on market concerns about the viability of certain banks following the Silicon Valley Bank collapse and others.

And the Wall Street Journal reported at the weekend that parts of Credit Suisse may be purchased by UBS.

After trading above $US15 five years ago, the share price now is less than $US2.

The problem Credit Suisse now has with implementing the demerger plan is that if it wanted to raise equity to fund the plan to pay for the cost and remove itself from any ownership from the spin-off in the absence of a new investor, it may not be available if its share price stays where it is.

Even before the recent share price fall and jitters last week, there were challenges to overcome.

The equities division was to remain with the main Credit Suisse Bank, and not be together with the new investment banking unit, Credit Suisse First Boston, and the plan was to bring in a capital partner to Credit Suisse First Boston to help pay for the split.

Yet whether a new investor can be found in this environment to fund such a deal is a big call.

Senior staff will likely own shares in the spin-off, whereas the equities specialists with the main bank will not, and distribution will be brought from the original Credit Suisse company.

The private banking unit that stays with Credit Suisse benefits strongly from its research unit and is a major customer of its equities operation.

One scenario could be that should the cost of the research and distribution services not be competitive, Credit Suisse First Boston could seek a better deal elsewhere and buy it from a rival.

Yet some said if this were the case, the investment banking unit would likely start its own equities division itself before it shared services with another competitor.

But even so, it may be enough to cause equities analysts and other executives to leave.