Credit Suisse M&A fees slide by 34% amid dealmaker exodus

Credit Suisse’s M&A revenues tumbled by 34% in the second quarter as the Swiss bank battled to stem an exodus of senior dealmakers.

The decline, to CHF112m during the three-month period, comes amid a deal boom that has seen European rivals including Deutsche Bank and UBS more than double revenues and Wall Street banks including JPMorgan haul in record fees.

Dealmakers across the world’s largest investment banks have helped offset a slump in fixed income trading revenues during the second quarter, with M&A a particular bright spot. Goldman Sachs increased fees by 83%, while Citigroup unveiled a 77% year on year increase.

READ Credit Suisse offers pay hikes to keep senior bankers as more depart in wake of Archegos

But Credit Suisse is working to stem an exodus of senior bankers in the wake of its $5.5bn hit from the collapse of family office Archegos Capital in March. Over 30 senior dealmakers have left the Swiss bank for rivals in recent months including its long-serving global head of M&A, Greg Weinberger, who has been replaced by London-based Cathal Deasy and Steven Geller in New York.

The Swiss bank said in its second quarter report that it has a “strong M&A advisory pipeline up both sequentially and notably on a year-on-year basis”.

Credit Suisse is offering pay rises and one-off bonuses to top dealmakers in a bid to retain them, Financial News has reported, as recruitment of key bankers becomes increasingly competitive.

In a call with journalists, Credit Suisse chief executive Thomas Gottstein said staff turnover was “in line with the past seven years”.

“While we have seen departures, notably in capital markets and advisory in the US, we have been investing in new hires across all major divisions including investment banking an in asset management,” he said.

Overall revenues within Credit Suisse’s investment bank fell by 44% to CHF1.6bn. Both fixed income and equity trading revenues declined during the quarter, while it took an additional CHF594m hit from the collapse of Archegos.

The bank has “de-risked and resized the investment bank by reducing leverage exposure” within its prime services function by $20bn, it said. Meanwhile, risk-weighed assets in the unit have decreased by $41bn.

READ Damning Archegos report slams ‘lackadaisical’ attitude to risk at Credit Suisse

Investment banks have hauled in a record $60bn in fees during the first six months of 2021, according to data provider Dealogic, with a boom in blank cheque companies during the first quarter replaced by an M&A boom in Q2.

Credit Suisse has retained its position as the top-ranked European bank in the first half, the ratings show, at $2.4bn in revenues. However, it ceded this spot to Barclays in the second quarter as more dealmakers departed.

Most banks have increased compensation costs as a result of spiralling revenues for dealmakers, with Goldman Sachs hiking pay by 50% in the first half of 2021 and Barclays’ bonus pool up by 45%. However, over the same period, compensation costs within Credit Suisse’s investment bank have declined by 13% to CHF1.7bn.

To contact the author of this story with feedback or news, email Paul Clarke

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