Credit Suisse Faces Banker Exodus After $5.5 Billion Archegos Hit
Credit Suisse Group AG CS 0.57% is facing an exodus of senior investment bankers in the wake of a $5.5 billion loss tied to the meltdown of Archegos Capital Management.
At least 10 managing directors in the Swiss firm’s U.S. investment-banking division have internally disclosed plans to leave, most for rival firms, according to people familiar with the matter. Other bankers are considering their options, and more are expected to depart in the coming weeks.
Investments held by Archegos, a family investment vehicle for Bill Hwang, plummeted in late March, forcing Credit Suisse and other banks to sell large stock positions at losses. Credit Suisse lent more to Archegos relative to its size than others and was one of the last to exit the positions, The Wall Street Journal previously reported.
The debacle, coming on the heels of Credit Suisse’s involvement with the now-insolvent financing firm Greensill, forced the bank to cut its dividend and raise fresh capital from investors to shore up its balance sheet. The Swiss bank ousted top executives in the wake of the loss.
As information trickled out foreshadowing the big hit to the bank, competitors on Wall Street and recruiters began circling. The timing was fortuitous for the firm’s rivals, as recruiting typically ramps up after annual bonuses are paid early in the year.
Barclays PLC poached several bankers including telecom-and-media specialist Ihsan Essaid, who is leaving to become the British lender’s co-head of Americas mergers and acquisitions, as well as Tim Devine and David MacGown, who focus on financial institutions, and Kamal Ahmed, who will become global head of semiconductor coverage banking. Two other bankers in the financial-institutions group, Chris Eby and Nick Daly, are leaving for Goldman Sachs Group Inc. and Bank of America Corp. , respectively.
Perella Weinberg Partners hired industrial-company banker Christian Bradeen. News and information-services banker Simon Auerbach also departed, as did Jason Wortendyke, a transportation banker who is headed back to Citigroup Inc., where he will be global co-head of diversified industrials. Healthcare banker Leo Reif is joining Jefferies Financial Group Inc.
The full scope of the departures hasn’t been previously reported.
Many Credit Suisse bankers have been frustrated that the failure of the bank’s prime-brokerage unit, which caters to investors like Archegos, overshadowed an otherwise strong run for the investment bank, especially within capital markets and advisory.
The bank has advised on high-profile transactions lately including chip maker Advanced Micro Devices Inc.’s $35 billion purchase of rival Xilinx Inc. and the $21 billion acquisition of Speedway by the Japanese owner of the 7-Eleven convenience-store chain. In 2020, it was ranked sixth globally on Dealogic’s M&A league table.
Part of that is due to Credit Suisse’s dominance in the special-purpose acquisition company market, underwriting a higher dollar volume of such vehicles than any other bank last year, according to SPAC Research.
Adding to the frustration, some bankers feel Credit Suisse’s management has done little to quell concerns about the impact of the loss on compensation.
In April, Credit Suisse installed former Lloyds Banking Group PLC Chief Executive António Horta-Osório as chairman and Christian Meissner, a Bank of America and Goldman veteran, as head of the investment bank.
The firm has said it would scale back the prime-brokerage business and Mr. Horta-Osório has signaled that riskier business areas could be jettisoned. He also said the bank will review its culture, pay and incentives, with a focus on personal responsibility and accountability.
Write to Cara Lombardo at firstname.lastname@example.org
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Published at Mon, 17 May 2021 22:26:00 +0000