Credit Suisse crashes out of top 20 fee earners

IFR 2486 - 03 Jun 2023 - 09 Jun 2023
5 min read
Americas, EMEA, Asia
Steve Slater

Credit Suisse has dropped out of the top 20 investment banks this year for the first time this century, after a 55% plunge in fees following the Swiss bank's crisis and subsequent rescue by arch-rival UBS, which have seen senior bankers and clients head for the exit.

Credit Suisse brought in US$428m in fees from M&A advisory, debt and equity underwriting and syndicated loans through to the end of May, down from US$945m in the same period of 2022 – and down 81% from US$2.2bn in the first five months of 2021, according to Refinitiv data.

That dropped the bank to 23rd in this year's global fee rankings, compared with eighth at the same stage last year.

Credit Suisse has never been outside the top 10 firms in any full year since 2000; since 2012 it has ranked sixth or seventh, usually fighting with Deutsche Bank and Barclays to be the top bank outside the big five US firms. In 2011 Credit Suisse ranked fifth globally, and in 2000 it was second.

The slump is a blow and a worry for UBS, which is about to complete its SFr3bn (US$3.3bn) takeover after rescuing Credit Suisse on March 19 in a deal backed by Swiss authorities. UBS is aiming to close the takeover during the week of June 5, sources told IFR last week, although the timing could shift.

UBS is keen to crack on with the integration of the two firms. Combining the investment banks is the most difficult part, and UBS bosses have said it will be complex and difficult.

“If the franchise of Credit Suisse is damaged then UBS management could take years of hard work to integrate for not much reward – for a business they didn’t want in the first place,” said Darko Kapor, a partner at investment bank analysis firm Tricumen.

UBS is expected to cut thousands of jobs from Credit Suisse's investment bank, which is estimated to employ about 17,000 people. UBS has said it will benefit from greater scale, depth and reach, but has said it does not intend to increase risk and will limit the investment bank's risk-weighted assets to about 25% of the enlarged bank.

Kapor said a lot of issues were hitting Credit Suisse, including uncertainty about what UBS would do with the investment bank, the threat of job cuts, risks from political interference and a slow market for deals.

“The revolving door can’t move quickly enough," he said. “Nobody knows what is going to happen with the UBS takeover. There are good teams at Credit Suisse, and UBS will want to keep those, but no official announcement has been made yet. The markets are also difficult and the recovery now looks like it’s not happening in 2023.”

Swiss newspaper Blick reported last week that about 150 people are resigning from Credit Suisse each day. Senior bankers and some teams have gone to Santander, Deutsche Bank, Citigroup, BNP Paribas, Evercore and smaller firms, especially in hot areas like TMT and healthcare.

UBS and Credit Suisse are even offering a US$30,000 cash incentive to analysts and associates who are due to start in July if they defer their start date until February, according to internal documents and a person familiar with the matter.

Down in all areas

A decline in Credit Suisse's fees is no surprise, but the scale and speed of the fall is. Its fees from M&A, underwriting and syndicated loans in the first five months of each year have averaged US$1.5bn over the past 23 years, and have only failed to top US$1bn in three years, including the last two.

Fees across the industry this year are down 18% from a year earlier in a tepid market for M&A and ECM in particular, although there was a modest improvement last month and fees were up 4% from May 2022, Refinitiv data showed.

Not so for Credit Suisse, however. Its fees for the first five months of the year were well down in all areas: M&A fees were down 62% from a year earlier at US$158m; DCM fees of US$139m were down 32%; ECM fees of US$47m were down 19% from a weak year-earlier level; and fees from syndicated loans slumped 68% to US$83m. The M&A, DCM and ECM fees were the lowest since at least 2000, according to Refinitiv data.

Credit Suisse's slump meant UBS brought in more investment banking fees than its rival for the first time since 2009.

UBS's fees from M&A, underwriting and syndicated loans were US$443m to the end of May, down 15% from 2022 to rank 20th globally, up from 22nd a year earlier, according to Refinitiv estimates.

Combined Credit Suisse and UBS fees of US$871m this year would put the firm eighth in the global rankings, behind the big five US banks, Barclays and BNP Paribas, and just ahead of Royal Bank of Canada.