Remember those 1,800 jobs earmarked to leave Credit Suisse’s London operation? Well, they're largely gone - around 1,250 UK employees have departed over the course of this year, but headcount in its investment bank as a whole continues to increase.
In its second quarter results released today, Credit Suisse said that there were some 11,620 jobs in its global markets business – which houses all sales and trading functions – 150 more people than at the same point in 2015. And, while 80 people have left its investment bank and capital markets division since Q1 – which includes all advisory functions - there are still 250 more people than at this point in 2015.
Its CFO David Mathers said today that headcount in London has fallen from 9,265 at the beginning of the year to about 8,000 now. We understand, however, that this figure includes contractors and consultants departing as well as redundancies within its global markets team. Because some roles are being relocated to Poland or India, shifting these jobs across requires more time. And, as we've pointed to previously, its recruitment of traders in Dublin is not complete.
But Credit Suisse’s planned cuts in London have been relatively swift compared to more drawn out redundancy programmes in other investment banks in the City. These jobs are not necessarily leaving the organisation, but merely moving to locations where they can pay their employees less. Credit Suisse’s focus on ‘insourcing’ functions like IT means that headcount is always likely to increase even as overall costs in the unit start to shrink over time.
This is reflected in how much it’s paying its employees. Compensation costs are down 12% year on year in the global markets division. On a per head basis, Credit Suisse paid an average of CHF124.6k for the first half of 2016 in this division, compared to CHF143.4k in 2015. This is a 13% decrease.
In its investment bank and capital markets division – which doesn’t include huge numbers of back office staff – average pay per head was CHF212.5k in the first half, compared to CHF262.7k at the same point in 2015.
Overall, Credit Suisse booked CHF150m in restructuring costs during the first half of the year. Much of this will be down to redundancies, but CFO David Mathers also pointed to the CHF60-70m “exit cost” of leaving a property in Canary Wharf following its “right-sizing” of the UK operation.
Credit Suisse’s revamped and shrunken global markets division posted a pretax profit of CHF154m, compared to CHF391m in Q2 2015. Its investment banking unit was down 7% year on year, with revenues of CHF135m.
Thiam said that the bank had executed 12 initial public offerings in the second quarter and that there were a “number” in the pipeline, but admitted that in the run up to the Brexit vote “some deals didn’t happen”.
Credit Suisse had, of course, already started moving non-critical markets functions out of London, but Thiam said that clients who needed access to the EU through the passporting system represent a “significant, but not critical” part of the global markets business. It has the “optionality” to move people to its existing Dublin or Luxembourg operations, he said.
Asia, and the ‘special sauce’
Credit Suisse has been hiring in Asia. Since last year, it’s added 850 people to its Asia-Pacific operation, despite a 12% year on year decline in revenues, and Thiam pointed out that it had taken the opportunity to bring in people who had departed from competitors retrenching in the region.
In its October 2015 strategy update, Credit Suisse pointed to how its ultra-high-net-worth division and its investment bank would be working closer together. Selling investment banking services to “very demanding” rich clients was key to growing business in the region.
Thiam said that this integration was “part of the special sauce” in Asia. “Selling your whole services and product range to an existing client base gives you growth,” he said.