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Credit Suisse trading slumps

CS, Deutsche come out worst from mixed Q3 for Europe’s banks

CREDIT SUISSE chief executive Tidjane Thiam
batted off a loss by the bank’s global
markets division last quarter, saying it
remained an integral part of the group and
helped drive the increasingly dominant
wealth management business.
“Global markets is the lowest returning
division in the company but the question is
does the whole [group] work?” Thiam told
analysts. “We have taken GM down in size at
an enormous pace, but it is not the main
driver of the story we are writing. It is not
driving the plan we have.”
Thiam set out his plans to revive Credit
Suisse in November 2015. But global
markets was a laggard because the
division’s head Brian Chin was only
appointed in 2016.
“Back in 2015 we said we wanted to align
it [global markets] more closely to the
wealth management business and reduce
OPERATINGûCOSTSvûSAIDûlNANCEûDIRECTORû$AVIDû
Masters. “We are a year behind in terms of
progress since 2016.”
Thiam said the restructuring of the division
would take another year. The unit’s revenues
fell 17% from a year ago to SFr1.04bn
(US$1.04bn) and expenses were only down 4%
at SFr1.14bn, leaving it with a SFr96m loss.
Fixed income trading revenues, including
FROMûTHEû!SIA
0ACIlCûUNITûTHATûREPORTSû
separately, crashed 29% from a year ago to
SFr550m. Equities revenues fell 8% to SFr591m.
That was far worse than peers. The big US
banks’ aggregate FICC revenues fell about 3%
and were up 8% in equities. European banks
have seen FICC revenues drop 5% on average
and seen equities only rise 2%. But that is
largely due to weakness at Credit Suisse and
DEUTSCHE BANKûINûBOTHûAREASûANDûINûlXEDû
income at BNP PARIBAS. In contrast, UBS and
BARCLAYS outperformed in FICC and equities.

“The weaker sales and trading performance

versus most peers demonstrates Credit Suisse

needs to continue repositioning the franchise

in a dynamic market environment,” ratings

agency Moody’s said.

ADVISORY BETTER

Credit Suisse said it was hit by turbulence in

emerging markets, citing Brazil as a

noticeably weak spot. It also said securitised

product revenues were lower compared

with a strong quarter a year ago.

“Market participants worried about the

impact of US dollar interest rate

normalisation, and about trade tensions, as

WELLûASûABOUTûSIGNIlCANTûPOLITICALû

uncertainties. This led to a drop in client

activity that compounded the usual, expected

summer slowdown,” Thiam said.

In equities the bank said derivatives

revenues increased 70% year-on-year, but

were outweighed by declines in cash and

prime brokerage.

)Nû!SIA

0ACIlCûMARKETSûREVENUESûFELLûû

TOû3&RMûINCLUDINGûAûûDROPûINûlXEDû

income and a 17% decline in equities.

HSBC reported solid investment banking

results, but that was largely on the back of good

transaction banking revenues. It also had a

poor showing in equities, which it blamed on

slow Asian markets. The banks that did better

were more exposed to the stronger US markets.

Credit Suisse enjoyed better news on the

primary and advisory side. Its investment

banking fees rose 7% year-on-year to

53BNûBETTERûTHANûTHEûBROADLYûmATû

performance across rivals on average.

M&A advisory revenue was up 23% to

US$291m and equity underwriting increased

37% to US$231m, helped by US IPO activity.

$EBTûUNDERWRITINGûFELLûûTOû53M

But the bank said tensions seen in the third

QUARTERûWOULDûCONTINUEûINûTHEûlNALûTHREEû

months of the year and hamper deals it was

working on.

Christopher Spink

15

Two former

Goldman

Sachs bankers are

charged with stealing

the proceeds of bond

sales by Malaysia’s

1MDB

23

Cyprus

reckons

banks there have

slashed their number

of Russian clients

and are getting to

grips with AML rules

17

Nigel Higgins

is picked as

the next chairman

of Barclays, after

spending all his

36-year career at

Rothschild

Source: Company results, IFR calculations

 FICC  Equities  Advisory/underwriting

0

5

10

15

20

25

30

35

US avg Deutsche Barclays HSBC BNPP UBS CS Europe avg

CS SLUMPS IN TRADING, OUTPERFORMS IN ADVISORY; Q3 REVENUE CHANGE IN % VS YEAR AGO