The thinking behind Credit Suisse's new-look investment bank

Marisa Drew and Mark Echlin

Speaking after revealing a revamp of the European business, Marisa Drew, co-head of investment banking and capital markets for Europe, the Middle East and Africa, said: “Now that we’re a quarter past the Brexit vote, we conducted a detailed assessment of what we think the way forward is in terms of the revenue proposition for our business and how we are organised around the opportunities that we see coming.”

Drew and her co-head, Mark Echlin, laid out the thinking behind the changes, which were revealed by FN on October 20.

The change: a new UK coverage approach
Large-cap UK clients will now be covered principally by the industry teams. A new UK advisory and corporate broking team has been formed, led by former co-head of UK investment banking, Charles Donald.

The rationale
Drew: You can see the performance of the FTSE 100 and 250 diverging. What that speaks to is the fact that the FTSE 100 is mainly made up of these big global companies that have very few assets in the UK. The 250 is performing less well, very much tied to the UK economy. We thought about how to cover these companies differently given who they are and what’s going to be affecting their performance going forward.

Echlin: You have international companies that have a UK heritage and are listed here, but for which the UK is a tiny proportion of their assets, revenues and exposures. They need people who understand their industries and can talk to them about it globally. What it means organisationally is that we’ll be doing most of our UK coverage through the industry groups going forward as opposed to industry groups plus UK bankers.

On the other hand, however, there are many UK clients that are much more aligned to the UK-centric business model where the UK perspective will be more important than a global industry view. For those clients we definitely need our senior UK bankers to lead the relationship.

The change: a new Emea infrastructure unit
Donald’s former co-head, Jonathan Grundy, will head up a new infrastructure division for Emea, bringing together the bank’s regional oil and gas, power and transportation teams.

The rationale
Echlin: It’s such a huge theme, and we’ve been fortunate to do a lot of infrastructure business. But our airports banker would go to a client and talk about airports, the pipeline and oil storage guys would talk about that and so on. What we’ve heard from clients, typically the big infrastructure funds, is that they want a much more coherent view across all infrastructure, whether telecoms towers, pipelines or other areas. So we decided to put all those sectors together into a new team.

The change: Refocusing in origination in M&A
Credit Suisse wants its M&A advisers working more closely with industry and geography bankers to drum up deals as well as structure them.

The rationale
Echlin: This is occasioned by our new head of M&A, Cathal Deasy. He’s focused on origination, and in this new world where we’re trying to be much more client-focused, we need industry, country and M&A in particular to be much better aligned. There’s been a tendency at firms to see M&A as an execution machine. That’s really not the way we want to do it. Yes, they’re involved in execution, but they also have to be very aligned and help us originate. We will still have an M&A group but most of our M&A MDs will locate themselves in the various industry and country teams. That will be quite a significant shift, but will give much better alignment.

The change: changes to reporting lines
The bank is folding in some reporting lines and combining groups, reducing the direct reports to Drew and Echlin.

The rationale
Drew: We’ve simplified this with the Senior Managers Regime hat on. Mark and I have had in the past many direct reports. We stepped back and asked which groups have clear natural synergies or a business leader whose natural skill set would align with some kind of combination.

For example, earlier this year, we asked Wences Bunge to assume leadership of IBCM in Iberia as chief executive of the region. He has historically run our real estate group and is a superb real estate banker, so we decided to have the real estate group report into him so we can leverage his relationships and expertise across both businesses. Moves like that allow us to take our direct reports down substantially. It will also allow us to leverage our junior resources across different businesses which will give them a richer development experience.

The change: consolidating emerging market coverage
The bank is bringing together all emerging market geographies coverage under Vikas Seth, a longtime Credit Suisse banker who was named head of emerging markets for the investment banking and capital markets division in 2015.

The rationale
Drew: We took a hard look at emerging markets, which are core to the DNA of Credit Suisse. Where and how revenues are generated from those markets? In years past you would find they were dominated by state-owned enterprises doing anything from privatisations to capital raisings.

The world has largely moved on. Now one of the most interesting areas of business flow aligned with who we are as a bank is coming from cross-border M&A within and across the emerging markets. We’re really good at that and we’re complimented by a huge commitment to Asia where we are seeing significant activity from Asian buyers looking to make investments in our region.

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