Morning Coffee: The only man who can save Credit Suisse bonuses. Career advice from the ex-CEO of HSBC
Where is Christian Meissner? Not in Zurich, not in London, but in New York (still). As the Credit Suisse drama unfurls, Christian Meissner is a long way from Europe. He is looking all the more important as a bulwark against the Swissification of Credit Suisse's investment bank.
An Austrian by birth, Meissner ran Bank of America's investment bank from 2010 to 2018 and joined Credit Suisse as head of the investment bank in October 2020. When he joined CS, Meissner was supposed to be moving to Zurich. That never happened. Last year, it was reported that he would be staying in New York for the foreseeable future instead.
If you work for Credit Suisse's investment bank in America, having Meissner in the locality is a good thing. America is important to Credit Suisse. The bank's acquisition of First Boston in the late 1980s means it has a strong presence there; it's one of the top players in the securitization market and ranks in the top five in some areas of leveraged finance. When Credit Suisse paid retention bonuses last year, it was partly to keep its restless U.S. people happy. Meissner's decision to remain on the other side of the Atlantic looks like an admission by Credit Suisse that its U.S. bankers and traders need the reassurance of a tangible leadership presence on their own soil.
While Meissner's New York base might be good for Credit Suisse's American business, though, it's less reassuring for anyone at the investment bank in London. Following Sunday evening's shock resignation of António Horta-Osório and appointment of Axel P. Lehmann to replace him, Credit Suisse is now in the hands of Swiss bankers with an archetypally cautious approach. Lehmann's career as a risk manager has predominantly been in the insurance industry. CEO Thomas Gottstein is a Credit Suisse lifer, and although he spent some time in equity capital markets at the start of his career, Gottstein has been immersed in the Swiss universal bank and wealth manager for much of the past decade. Credit Suisse's European bankers are dependent on newly promoted fixed income trader Shane O’Cuinn and banker Jens Welter to fight their corner. The European bank as a whole is being run by Francesco De Ferrari, a wealth manager, who was hired at the end of last year.
This matters, because decisions need to be made about Credit Suisse bonuses for 2021. While O’Cuinn and Welter might stand up for the investment bank, Gottstein, Lehmann and De Ferrari don't look like people who will fight the corner of the investment bank in a year when billions were lost through the incompetence of managing directors in the prime broking division. While Horta-Osório wasn't a big friend of the investment bank (he reportedly described Credit Suisse as a successful wealth manager with ancillary services), he was at least seen walking the trading floor, and wasn't a model of Swiss austerity himself. - His exit, while triggered by COVID quarantine violations, also seems to have had something to do with a penchant for using the Credit Suisse private jet for personal travel.
If the coming Credit Suisse bonuses looked miserable before the weekend, therefore, they look even worse now. The only hope is that Meissner will intercede, possibly via Zoom. Although Switzerland's quarantine rules have been relaxed since Horta-Osório's infringements, sitting in New York and petitioning for at least some kind of bonus pool might be the safest option.
Separately, John Flint, the former CEO of HSBC has been dispensing leadership advice in a webinar that's now on YouTube.
Among other things, he says that setbacks are good - they build leadership "muscles" and can lead to better things. "When I look back at my 30-year career there were many moments of setback and crisis, either personal failure or externally driven failure, and they were incredibly valuable. They typically represented the foundation for an upward shift in my career,” reflects Flint.
When he got his first big promotion, Flint says it came as a surprise: “I told him, ‘Sorry, I think you have me confused with someone else’.” And he says the art of leadership is appearing to know what you're doing even if you don't, particularly when things are going badly: "In times of crisis people are looking for an anchor. Something to hold on to."
Horta-Osório was dispensed by board members including vice chairman Severin Schwan as well as directors Richard Meddings and Christan Gellerstad. The board told him he could either resign or they would suspend him and ask for him to be dismissed at the bank's next shareholder meeting in three months. (FiNews)
Horta-Osório travelled from London to Zurich on November 28, shortly after a 10-day quarantine requirement was introduced in Switzerland. He said it was a “mistake” and “unintentional,” but Swiss newspaper Blick said he sought quarantine exemptions from both the local canton and federal government, but was told he would receive no special treatment. He then ignored the quarantine anyway. (Financial Times)
“We are committed to developing a culture of personal responsibility and accountability, where employees are, at heart, risk managers,” Horta-Osorio said in a statement in July. (Bloomberg)
“We have set the right course with the new strategy and will continue to embed a stronger risk culture across the firm,” said Lehmann yesterday. (Bloomberg)
"The strategy isn't changing. We want to focus on the Swiss business, on wealth management, and on the risks in our company, specifically in the investment bank," said Lehmann too. (FiNews)
“In the medium-term we do wonder if the focus on growth over capital return and revenue growth over cost saves [at Credit Suisse] may be revisited.” (Bloomberg)
Horta-Osorio could receive £3.8m for leaving. (Telegraph)
Tidjane Thiam is busy working on his SPAC. (Telegraph)
Hedge fund TCI (Children’s Investment fund), which sponsors Extinction Rebellion, made a gain of $9.5bn last year. (Guardian)
Walmart is preparing to create its own cryptocurrency and collection of non-fungible tokens. (Bloomberg)
London bankers are getting 19% pay rises when they change jobs. (Bloomberg)
Guillaume Pousaz wanted to be an investment banker, but dropped out of college when his father was diagnosed with pancreatic cancer. He set up Checkout.com instead, and it's now worth $40bn. (Bloomberg)
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