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Morning Coffee: The hidden king of Credit Suisse and a forex trader’s naked ice bucket challenge

The aftershocks of the week-long “spy scandal” in Swiss investment banking keep on coming, for all that people try to calm them down.  According to Finews, there are still rumblings of discontent over how the affair was handled, and in particular about how Iqbal Khan was allowed to depart quickly for a competitor rather than repair his relationship with Tidjane Thiam after the alleged New Year’s party incident.

What’s interesting, though, is that the rumours of discontent are being attached to one person in particular, someone who’s often forgotten about from day to day but who appears to hold a role weirdly reminiscent of a constitutional monarch in the governance of Credit Suisse – the “honorary chairman”, Rainer Gut.  Mr Gut was the “Speaker of the Executive Board” (the equivalent of CEO before these Americanisms reached Zurich) from 1977 to 1983, and chairman of the CS group for seventeen years after that until 2000.  He doesn’t seem to draw a salary or have a formal role at CS, but he has an office there, a profile on the website and apparently is able to attend whatever meetings there he feels like.

Like a monarch, Mr Gut generally appears in ceremonial roles, such as at the introduction of Tidjane Thiam as CEO.  He joined the firm in 1971 (after having been a partner at Lazard) and appears to have spent the last 48 years gradually attracting more and more influential Swiss connections to himself.  He even has something approaching an heir apparent – Alexander Gut, a former KPMG consultant with his own corporate finance boutique, was elected as a non-executive director of Credit Suisse in 2016 and has even been semi-seriously suggested as a candidate to be the next chairman.

From a corporate governance point of view, it is quite odd to have emeritus figures hanging around in the background, with a non-specific but occasionally significant influence on the leadership of the company.  It’s by no means unknown in the investment banking industry, though – Sidney Weinberg might have been considered a similar figure at Goldman Sachs, as indeed might his son John L Weinberg.  People like this are the ultimate culture-carriers and keepers of the long term institutional memory.  That also means that they can end up being the final underwriters of the legitimacy of the top management; Mr Gut’s appearance at the press conference for Tidjane Thiam certainly wasn’t purely symbolic.

This is because the way in which an honorary chairman is like a constitutional monarch is that, as anyone who’s observed the UK and Brexit over the last few years will tell you, things are usually happier when you’re able to kind of forget about the monarch’s existence.  The good times at Credit Suisse are generally when it is able to act like a global investment bank and wealth management firm.  When people start remembering the importance of the “Swiss establishment”, that’s usually a sign that things aren’t going so great in general terms, and specifically that office politics has broken out.

Elsewhere in the world, the presumed danger of starting every day by stripping naked in your garden and pouring a bucket of ice cold water over your head is that the neighbours will object (or will possibly mistake you for the ordinary kind of lunatic and call the police).  The advantage of doing so, according to Ed Matts of Matrix Trade, is that it wakes you up and gets you in the right frame of mind to trade forex.

Bloomberg Business followed Mr Matts and Guarav “Steve” Mehra (a Geneva-based trader who prefers to wind down from the market with help from a glass of vodka and soda “the size of a goldfish bowl”) around for a few months as they attempted to follow the twists and turns of Brexit and their effect on cable.  There is a distinct sitcom element to some of the proceedings; recently separated Mr Matts gets a Belarussian girlfriend who makes him turn vegetarian, while former cricketer Mr Mehra has a miniature schnauzer named after Mario Draghi.  But there’s also a few insights into the ways in which the forex game is played and how political event risk moves markets.  Both of the stars of the story seem to have made a profit.

Meanwhile …

“People treat you differently when you’re CEO of Goldman Sachs”, according to David Solomon.  In order to stay connected, he has to “make a conscious effort … especially with the younger workforce”.  It doesn’t say this in the interview, but he can always spin a few EDM tunes and the young employees will show up to dance, because people treat you differently when you’re CEO of Goldman Sachs. (Institutional Investor)

Largely as expected, the research sharing agreement with Kepler Chevreux means that Macquarie will be scaling back its equities operation in London and New York, with about 100 jobs lost. (Bloomberg)

Credit Suisse has Rainer Gut, but in the background of Deutsche Bank is the actual royal family of Qatar, and they are angry about having their representative on the board turned down by the regulator.  They may be blaming Paul Achleitner.  (Finews)

Although the Hong Kong/London deal is off, things look set to remain exciting in the exchanges space, as Deutsche Boerse has a $2bn war chest and isn’t shy when it comes to talking about it (Bloomberg)

An email to all staff at JP Morgan Singapore has gone out reminding them to “demonstrate the highest standards, including respect and dignity for others, inside and outside the workplace”.  It seems to be following on from a viral video of a JPM employee shouting at a car park security guard in his apartment building. (Straits Times)

Alan Howard is stepping down from the CEO job at Brevan Howard, to spend more time with his (and other people’s) money, as he concentrates on managing his macro fund (FT)

“The challenge isn't finding a portfolio manager, it's finding a portfolio manager with the experience first hand of investing in Asia while being based in Asia”.  The growing domestic hedge fund sector in Asia means that many employees are picked up as fast as the banks can cut them. (Finews Asia)

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AUTHORDaniel Davies Insider Comment

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