Credit Suisse bankers in Hong Kong deserve some love
In Hong Kong, one of the Swiss bank’s profit centers for years, its worker bees are not happy. The job cuts began this summer, with the slashing of some client-facing positions at Greater China’s investment bank. Meanwhile, in its crown jewel wealth management division, which serves high-net-worth individuals in Asia, Credit Suisse is scrambling to prevent the departure of its top bankers.
The private bankers cannot be blamed for abandoning ship. Amidst all this turmoil, this year’s bonus pool is set to shrink even further. Unlike some US peers where private bankers receive a percentage of the revenue they generate, Credit Suisse bonus payments are discretionary. A bonus pool is determined globally and trickles down to Regional Offices, Team Leaders and Customer Relationship Managers.
As a result, private banker payout ratios can vary from person to person and from year to year. Some may not eat what they have killed at all. Add to that that part of the bonus is paid out in Credit Suisse shares – which have lost half their value this year – and bankers may not even wait for clearing season before heading for the exit.
The brain drain may be a wake-up call for Zurich residents. Asia has been a major profit center for the Swiss bank. Between 2016 and 2020, the region contributed one-third of profit growth to its wealth management division and 48% of cumulative growth in invested assets, according to HSBC Holdings Plc. Credit Suisse’s flagship region does not shine without its diligent bankers in Hong Kong.
Now Credit Suisse can point to China’s slowdown and say that Asia isn’t the only game in town – North America, for example, is generating a lot of new wealth. That would be a flawed argument. New business opportunities are emerging even as China continues its crackdown on big business. For example, mainland family offices now want to open branches in Hong Kong and Singapore and diversify their wealth into overseas assets.
Furthermore, it can be said that the two major divisions of Credit Suisse in Asia – investment banking and wealth management – complement each other. Chinese private clients get rich by listing their companies on the stock market; they are also fervent investors in their personal wealth. According to HSBC, here in Asia, investment banking contributes as much to profits as the wealth management business. Why break something that is already autonomous?
A big problem with Credit Suisse is a mismatch between its risk appetite and bureaucratic corporate culture, complain former Hong Kong bankers. They wonder why the U.S. prime brokerage unit served Archegos Capital Management, incurring $5.5 billion in losses, and why the bank’s asset management arm marketed supply chain finance of Greensill Capital as one of the safest investments it offered, thus tarnishing the bank’s reputation. Why should Hong Kong be coached to share the burden?
Maybe it’s time for Credit Suisse to show some love to its Hong Kong bankers.
More from Bloomberg Opinion:
• No, Credit Suisse is not on the brink: Paul J. Davies
• Hong Kong bankers might as well shut up now: Shuli Ren
• Credit Suisse and the Hotel California effect: Marc Rubinstein
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She holds the CFA charter.
More stories like this are available at bloomberg.com/opinion