November 30, 2023

Investment Banking

Let Your Investment Banking Do The Walking

Credit Suisse, Jarden among investment banks culling mostly junior staff in post-pandemic cost-cutting

Investment banking cuts in Australia have barely edged above 10 per cent of banks’ work forces, people told the Financial Review. This pales in comparison to bigger lay-offs in financial centres like New York and London.

Banks increased their junior ranks in the past two years to manage a deluge of transactions, but are downsizing to cope with an expected lull in dealmaking in 2023. There is also a push to trim expenses because many banks hired senior deal makers in the past year who inked guaranteed bonuses into their salaries before moving shops.

Credit Suisse is planning to reduce headcount by 9000 people globally, in line with a reorganisation taking place under new chief executive Ulrich Korner. Goldman Sachs introduced its annual peer review process – after putting it on ice for two years – to weed out under-performing bankers in September.

Changing of the guard

Credit Suisse bankers from New York to London have braced for lay-offs for months after the Swiss investment bank said it would restructure plans into one focused more on advisory services and less on capital intensive activities like underwriting.

Two managing directors, recently let go in New York, said they’d padded their resumes in advance of being fired. Others started job hunting after Credit Suisse endured million-dollar losses from the Archegos Capital Management scandal, which raised concerns over the bank’s risk management capabilities in 2021. The bank also took a hit when its funds were exposed to Greensill Capital, the supply chain lender, which filed for bankruptcy in April last year.

Angelo Scasserra. Renee Nowytarger

In Australia, Angelo Scasserra, Credit Suisse’s co-head of investment banking for Australia, will leave next year, the Financial Review’s Street Talk reported on Thursday.

UBS also snagged Veronica Kaufman, who ran local corporate derivatives at Credit Suisse, Street Talk reported this month. Melbourne-based Kaufman will join the Swiss rival in February as an executive director in its Australian capital markets team.

Sprint to the finish

Just as firms trim their teams, Australia’s investment banking divisions are ushering through jumbo-sized transactions to close out 2022.

Morgan Stanley is advising Crescent Capital on a roughly $800 million deal to sell its radiology business PRP Diagnostic to IFM and UniSuper. RBC Capital Markets is advising the buy side, Street Talk reported on November 1.

Barrenjoey and Jarden are advising Origin on its potential $18.4 billion sale to Brookfield and private equity firm EIG. UBS and Citi are working with the private investment firms.

Citi and Barrenjoey are also helping BHP in its pursuit of OZ Minerals, which is being advised by Macquarie Capital, Greenhill and Gilbert + Tobin.

Bankers are keen to beef up their fee intake for the year, and ensure they’ve trimmed some expenses. Bonus season – expected to be one of the weakest payouts in years – is just around the corner. US and European banks typically pay their investment bankers their annual bonuses in February and March.