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Morning Coffee: Credit Suisse regrets dumping senior M&A bankers. This man will get you a job in a hedge fund

Brady Dougan

It’s second quarter results day for Credit Suisse. If you work in the investment bank, there is some good news: profits have doubled and cost cutting is nearly over. There is also some bad news: pay per head is down, again.

Following some intensive cost cutting, Credit Suisse has done a good job of improving margins at its investment bank. In the second quarter of 2012, costs were a dangerous 85% of revenues. In the second quarter of 2013, they were a far more manageable 74%. 500 jobs have gone. CHF1.7bn of expenses have been cut, there’s only another CHF 0.1bn of expense cutting to go. Thanks to the efforts of Brady Dougan and his team, second quarter profits have doubled from CHF314m to CHF754m.

Equally, however, Credit Suisse has been very deliberately cutting the amount it pays its average investment banker. There was a recent time both when the average banker at Credit Suisse was paid considerably more than his counterpart at UBS and when Credit Suisse’s compensation was nudging that of Goldman Sachs. Not any more. In the first half of 2013, pay per head at Credit Suisse averaged CHF151k ($161k), down 12% on last year and considerably lower than the $254k per head on offer at Goldman Sachs. Compared to the first half of 2010, Credit Suisse has cut investment banking pay per head by nearly 30%.

Part of this can be attributed to a deliberate policy to clear out senior investment bankers. Last year, Credit Suisse was said to dump up to 30% of all its directors and managing directors in IBD in Europe. The bank has been left with a leaner, cheaper workforce as a result. On the whole, this doesn’t appear to have affected revenues, which were up year-on-year in most business areas. In M&A, however, Credit Suisse looks like it’s struggling: the bank said today that it’s M&A revenues were down as a result both of lower M&A volumes and lower market share. It seems that banks dump senior M&A rainmakers at their peril.

Separately, if you want to go and work for a hedge fund, Financial News has identified precisely the man for you. Stephen Keller, a managing director and senior relationship manager for hedge funds at UBS, has reportedly left the bank and joined Millennium Management, the New York-based mega-hedge fund which keeps hiring – particularly from investment banks. Keller’s remit at Millennium is said to include ‘sourcing potential portfolio managers for the fund to hire.’

Meanwhile:

Trading revenues drove Credit Suisse’s profits. (Reuters)

Having closed cash equities, M&A, corporate broking, ECM and research, RBS is now thinking of making its investment bank part of its corporate bank, at which point Peter Nielsen and Suneel Kamlani – heads of the markets business – will probably leave. (Financial Times) 

Second quarter profits at Evercore doubled on the back of strong M&A fees. (Bloomberg) 

This looks like bad news for M&A bankers at Citi. (Seeking Alpha)

MBA recruiting is down, with financial services MBA recruiting weakest of all. (Businessweek)

Beware: it is very difficult to move between hedge funds. (Wall Street Oasis)

Headhunters says she has had ‘more resumes’ from SAC over the past week, but not ‘a flood.’ (Reuters) 

Humans are proving better than robots at responding to Federal Reserve signals on the end of quantitative easing. (Bloomberg) 

78% of Britons think banking bonuses are unfair and 58% support a bonus cap. (YouGov) 

Hedge fund manager has Gatsby-style parties at his house in the Hamptons, ‘fancy porta potty’ is constant feature on his lawn. (NYPost)

How to use social media to find a job. (JobAcle)

Andrea Orcel has the ‘upper body of a bodybuilder.’ (InsiderParadePlatz) 

Comments (1)

Comments
  1. Credit Suisse is the most average of banks which consistently delivers mediocre results quarter over quarter. The bank is run by weak management from the top (Brady) to bottom, who have no idea what strategy to follow.

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