Credit Suisse cut its bonus pool for Asia-based bankers and traders last quarter, its financial results reveal.
In Wealth Management and Connected (WM&C) – the larger of Credit Suisse’s two APAC units, which houses both IBD and the flagship private bank – compensation and benefits costs decreased 5% year on year to CHF256m in Q1, “primarily driven by lower discretionary compensation expenses” (i.e. bonuses). This implies that bonuses alone probably fell by more than the 5% overall reduction. Comp costs were up compared with the previous quarter, but that’s to be expected because European banks don’t pay bonuses in Q4.
What accounts for Credit Suisse’s bonus parsimony in WM&C? It’s likely that the advisory, underwriting and financing team (AU&F – i.e. the Asian investment bank ‘connected’ to the private bank) bore the brunt of the cuts – with M&A and ECM bankers worst hit. AU&F revenues decreased by a substantial 20% to CHF167m, mainly due to lower fees from M&A transactions and lower equity underwriting revenues. This decline reflects dismal investment banking results for CS globally.
That’s not to say that Credit Suisse’s private bankers in Hong Kong and Singapore enjoyed a bumper quarter. Revenues were down 13%, primarily because of a slump in transaction-based revenues, although private banking still generated vastly more money than IBD did (CHF398m vs CHF167m). It wasn’t all bad news in Q1 – Asian assets under management rose 10% year on year to CHF219bn. AUM was also up 8.6% compared with Q4 as the Swiss firm took on net new assets of CHF5bn and increased its headcount of Asia-based relationship managers by 20, taking it to 600.
Meanwhile, if you work in Markets (Credit Suisse’s second and smaller APAC unit, which focuses on equities and fixed income trading), you can at least be grateful that Q1 was not as bad as Q4, when Asian markets tanked. Fixed income sales and trading staff will be particularly pleased – revenue in their product was CHF91m in Q1, up from just CHF2m the previous quarter.
The Markets team didn’t do so well year on year, however. Revenue decreased 12% to CHF289m, mainly because of a decline in equity sales and trading (both cash equities and prime services). Compensation also took a hit – falling 6% compared with Q1 2018. As in WM&C, it’s likely that bonus spending slumped by more than this percentage, because the Markets cost cutting was again mainly driven by “lower discretionary compensation expenses”.
Image credit: Sergio Delle Vedove, Getty
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