If daily deterioration in a bank's share price is a measure of its health, then neither Credit Suisse nor Deutsche Bank are looking very vital. Deutsche's shares deteriorated another 4% yesterday, taking their decline since the start of January to 40%. Credit Suisse's shares deteriorated another 8%, meaning they're down 40% in 2016 too.
Credit Suisse doesn't face the same concerns as Deutsche Bank over the payment of coupons on its Coco bonds, but the two banks have some other very important things in common. Firstly, they both have new chief executives. Secondly, it's possible that the boards behind those chief executives aren't up to the job.
Swiss website finews points out that Credit Suisse's board includes all sorts of exciting people. - There's a man who helped designed Google's driverless car, a Harvard professor, and the CEO of Roche. There's also a woman who spent 13 years at the European Bank of Reconstruction and Development, and there's Urs Rohner. a securities lawyer who spent time in the entertainment industry. What there aren't, are senior bankers with the authority to challenge the CEO, Tidjane Thiam.
It's a similar story at Deutsche Bank. Reuters reports that aspersions are being cast about the calibre of the German bank's supervisory board. One "top ten" investor told Reuters the board is lacking, "competence in financials" and that faith in chairman Paul Achleitner is waning. Achleitner himself is a former partner at Goldman Sachs in Germany, and Deutsche does have several supervisors with finance backgrounds. However, members of Deutsche's supervisory board also include the president of the German academy of science and engineering, the chairman of the board of E.ON, and various trades unionists.
The consequences of a weak board are arguably more visible at Credit Suisse where Finews claims that Thiam has, "been granted carte blanche over the bank’s new strategy." Cryan's remedy for Deutsche isn't without its critics either, however: one investor told Reuters that the two years Cryan's given himself to implement Strategy 2020 are too long and leave no margin for error.
Maybe a stronger board would hold Cryan to task? Maybe a stronger board would also stop Thiam rushing off into Asia and dismantling Credit Suisse's investment bank? Both banks could benefit from hiring some highly seasoned banking executives with experience of steering organizations through choppy waters. If this is you, get in touch. Shareholders at Credit Suisse and Deutsche might be very thankful.
Separately, the UK Financial Conduct Authority's judgement on ex-J.P. Morgan CIO trader Achilles Macris (whom it's just personally fined £800k for "failing to be open and cooperative" during its investigation) puts paid to any notion that banking pay shriveled and died after the financial crisis. In the year from 30 April 2011 to 29 April 2012, the FCA says J.P. Morgan paid Macris £6.2m ($9m)....
In which Achilles Macris ignores the fine and focuses on something else entirely. (Mondovision)
In which John Cryan reiterates that Deutsche is hiring in equity research and M&A. (Deutsche Bank)
Maybe it is more appropriate to think of Cocos as a regulator-optimised form of preference share. (Alphaville)
The problem here: “At the root, are some of these [European] banks as well capitalised as the US banks? Probably not. Can they continue to build capital in an environment where there is not a lot of revenue growth, and a lot of expenses have already been taken out of the business?” (Financial Times)
Deutsche Bank's shares now trade at about 35% of the tangible book value of the bank's assets, partly because equity investors can't get a clear handle on what lies ahead. (Bloomberg)
Credit Suisse just moved a managing director in its global credit products business into its strategic resolution unit. (Reuters)
UBS had been planning to hike salaries in the investment bank. It's decided to postpone the decision to go ahead until Q2. (Bloomberg)
Morgan Stanley executive says the year has begun very badly for traders and that the bank dumped 25% of its FICC front office staff because it, "“sends a message to the market that we’re listening, but also that we’re in it for the long term.” (WSJ)
How to get a top job at Barclays: have a history of working with Jes Staley at JPMorgan. (Business Insider)
Some of the brokers acquitted in the LIBOR were builders before they went to broking. (Bloomberg)
If you don’t sleep 8 hours a night, you’ll confess to things you didn’t do. (BloombergView)