Credit Suisse’s private bank in Asia Pacific is boosting its headcount and generating more revenues. But income is falling at its investment bank in the region, raising the prospect of job cuts.
Net revenues in Asia Pacific investment banking declined by 16% year-on-year in 2016 to CHF2,223m at Credit Suisse, while in private banking they rose by 17% to CHF1,374m over the same period, according to its annual results.
Investment banking contributed 62% of the firm’s APAC income, down from 69% in 2015.
Last year wasn’t entirely bleak in the Asian investment bank, however. Revenues from underwriting and advisory, and from fixed income sales and trading increased 38% and 4% respectively.
The overall slump is down to a 30% decline in equity sales and trading, the division which provides the bulk of Credit Suisse’s income in Asian IB. This was “driven by decreased client activity, particularly in Greater China”, according to the CS results.
Several banks – most notably Barclays and Standard Chartered – have culled equities jobs in Asia over the past 12 months as they struggled to generate revenues in the wake of the Chinese stock market crisis.
“In light of its financial results, Credit Suisse may review its equities headcount in Asia,” says a Hong Kong-based headhunter. “As the redundancies at other banks in Asia last year showed, no bank wants to be overstaffed in equities.”
Credit Suisse itself cut cash equities jobs in London, Dubai and South Africa in October last year.
In Asian private banking, by contrast, Credit Suisse has been on a hiring drive and it increased its APAC assets under management by 11.9% in 2016.
Its headcount of relationship managers in the region stood at 640 at the end of 2016, up from 580 the previous year.
“Basically, Credit Suisse wants to be as big as UBS in Asia. It’s recruiting aggressively in private banking here,” says former Merrill Lynch private banker Rahul Sen, now head of wealth management at search firm The Omerta Group.
The Swiss bank still needs to hire another 160 RMs by the end of next year to meet its own headcount goal, however.
CEO Tidjane Thiam announced in October 2015 that Credit Suisse would employ 800 RMs in Asia by December 2018 as part of a pivot towards Asian wealth management and a focus on selling investment banking products to entrepreneurial private clients.
This target is now looking tougher. While RM numbers rose by 60 year-on-year, they fell by 10 in fourth quarter of 2016.
During Q4 Credit Suisse, like UBS, trimmed private bankers who weren’t meeting revenue targets, say private banking headhunters.
Total headcount across UBS in Asia Pacific rose from by 390 (from 6,590 to 6,980) between 2016 and 2015, including the 60 new RMs. The bank does not break down the rest of its hiring, but recruiters say much of the increase was in middle-office and technology functions.
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