With talk of hiring freezes all over the industry, it makes sense to be looking for ports in which to weather the storm. Banks can be safe employers through a downturn in one of two ways. Either they can have such strong franchises that their revenues are invulnerable to cyclical downturn. Or, perhaps more realistically, they might be in a competitive and strategic position where their hiring strategy isn’t so sensitive to the deal flow.
Some areas of Credit Suisse, for example, might be a better bet than others over the next few years. The Dealogic league table figures suggest that it’s been hit hard. For the year to date, it seems to have lost almost a third of its market share (from 3.4% to 2.7% of global investment banking fees) and has consequently fallen down the rankings (although it remains in the top ten). And yet, according to David Miller (and despite today’s profit warning and intimation of cost-cutting to come) Credit Suisse’s long-serving global head of capital markets and investment banking, they’re back.
Miller’s ebullience seems curiously timed given the profit warning, but in employment terms, the Credit Suisse investment banking franchise is well below its target numbers; it lost 69 senior bankers over the period of the Archegos and Greensill scandals and although it’s made 55 Managing Director level hires, Miller has told Bloomberg that he still plans to take on another 40 MDs, mainly in tech and healthcare. Unless CS plans to get remarkably top-heavy, forty rainmakers will require a significant staff of Directors, Vice-Presidents and Associates to report to them; David Miller classes the hiring plans as “one of the biggest objectives we have right now” and says that he’s “talking extensively across the Street and we will continue to bring people in until we feel like we’re at the right spot”. If baseball metaphors mean anything to you, the turnaround is apparently in the last three innings.
The question that cynical bankers will be asking, though, is can he deliver it? Looking at past industry cycles, there are plenty examples of heads of investment banking who have been given a big mandate to hire, only to see it taken away and turned into a mandate to cut costs when the board gets nervous. David Miller has been pointing out to clients that the investment bank accounts for 44% of revenues at CS, but this isn’t necessarily a protection – in 2018, corporate and investment banking was 51% of revenues for Deutsche Bank, but that didn’t save it from Christian Sewing’s restructuring.
Mr Miller is likely to be aware of this – he’s a long term survivor at CS, who is now on his fifth CEO, having been through previous attempts by CEOs to treat the non-wealth management businesses as “ugly ducklings” And he seems to be acting in quite the politically astute manner to…
