Why we’ll all miss Paul Calello
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Why we’ll all miss Paul Calello

Clive Horwood, Euromoney’s editor, remembers one of the finest individuals – let alone bankers – he has had the pleasure to know

We’ll all miss Paul Calello. Most of all, of course, his close colleagues and friends. The people who worked for him at Credit Suisse. His peers in the upper echelons of the global financial community. But his passing is a blow to everyone who works in the banking industry.

Paul was a true prince of investment banking. With everything he did, in the way he conducted himself and his business dealings with respect, enthusiasm, fun and intellectual rigour, he was a beacon of honour for a profession that has rightly earned its share of opprobrium in recent years.

At just 49 years of age, his career has been cruelly cut short. But what a huge amount he achieved in the time he had.

He’ll be remembered best for his transformation of Credit Suisse’s investment bank before and during the recent financial crisis. In the first half of 2007, while markets were still booming, Calello and his close friend and colleague Brady Dougan decided it was time to reinvent Credit Suisse’s investment bank towards a client-focused, capital efficient model. The accepted wisdom at the time was that it was not possible to be sufficiently profitable just by doing business with clients. Calello and Dougan disagreed. It’s now a model that many global investment banks are trying to copy. Few believed they were making the right call at the time.

Credit Suisse aggressively reduced its exposure to impaired assets, even as markets began to fall dramatically. It made even tougher decisions to exit businesses in which it had been a leading player, such as CMBS, leveraged finance, principal trading and highly structured derivatives. Calello was determined to take the pain early to ensure Credit Suisse had the right model for the future. His commitment to seeing the process through never waivered.

The reward came as Credit Suisse emerged as a clear winner from the crisis in 2009. Its return on equity outperformed its peer group quarter after quarter. Its tier 1 capital levels were among the best in the industry, its risk-weighted assets among the lowest. He stood firm behind the concept of fair-value accounting. He put his money where his mouth was on executive pay, introducing hugely innovative compensation schemes, notably the Partner Asset Facility.

Euromoney recognised these achievements on two occasions: as our investment bank of the year in 2009; and as our bank of the year in 2010. Calello was integral to the firm’s success.

But it’s Paul’s personal as much as his professional qualities that will live long in the memories of those who were lucky enough to know him. When he talked about doing the right thing for his clients, or for his firm, he really meant it – he was not paying lip service like so many in the industry.

Credit Suisse’s ambition to be seen as the “most admired” bank in the world would sound trite in the hands of others. When Paul said it, you understood it was a goal he truly believed in.

He was combative, loving nothing more than a verbal joust about the state of Credit Suisse or the industry as a whole. He was engaging, fun and often mischievous. He was a great thinker. When a paper he had co-written this year with colleague Wilson Ervin on the “bail-in” concept for addressing the failure of large financial institutions began to gain traction among policymakers, he could not have been more pleased – not because of the boost to his self-esteem, but because he believed that it would be good for the industry he loved. It’s no surprise has was spoken of as a potential successor to Tim Geithner as he was head of the Federal Reserve Bank of New York.

The rewards that came with his professional success were great, but that was not what motivated Calello. I was privileged to get to know Paul well, and he became a great friend and mentor. After one of our early meetings, I remember talking to one of Paul’s close colleagues: “He’s not like many other senior bankers, is he? What motivates him?”

His colleague replied: “You’re right. He loves the intellectual challenge of the business. He loves dealing with people. He actually really enjoys this.”

It was a huge shock to everyone when, last year, Paul was diagnosed with non-Hodgkins lymphoma. Just a few weeks earlier, in July 2009, he had been in London to collect Credit Suisse’s award for investment bank of the year. Despite having just flown in from the US overnight, he was there celebrating with the team that he would insist deserve all the credit for the bank’s success. As the evening wore on, he was spotted playing a game of pool with a close colleague. Cue in hand, there was the real Paul Calello – fun, engaging, un-prepossessing and, it has to be said, highly competitive!

I last saw Paul in June this year. Even though his treatment must have been taking its toll, you’d never have known. Credit Suisse was advising Prudential on its battle for AIA. The bid may have been in its last throes but Paul was still energetically endorsing the reasons it should be approved by AIG’s board and the Pru’s shareholders. He was passionately defending the payouts just announced under Credit Suisse’s long-term incentive plan. As the first wave of the European sovereign crisis hit the markets, he laughed as he said: “A few weeks ago people were asking us why we weren’t taking more risk. Now they’re phoning up to say, ‘We hope you’re not taking any risk!’”

Paul’s achievements, and his way of doing business, will no doubt continue to propel Credit Suisse forward for many years to come. He will also be remembered through a permanent professorship at Columbia Business School, the Paul Calello Professorship in Leadership and Ethics, endowed by a group of close colleagues at the bank in October this year.

It’s a fitting tribute. Paul was peerless in the way that he conducted himself throughout one of the most successful careers of his generation. Everyone working in the banking industry would do well to be a little bit more like Paul Calello.

But there is only one Paul. And we will all miss him terribly.

Our thoughts are with his wife, Jane, and their children.

Credit Suisse rebuilds its model
July 2009

Brady Dougan and Paul Calello stripped down Credit Suisse’s investment banking vehicle as the credit crisis hit. Now they’re showing off a streamlined, non-polluting, yet powerful firm that even their competitors admire. Is Credit Suisse the model of a new investment bank? Clive Horwood reports.

2010 Awards for excellence Bank of the Year: Credit Suisse
July 2010

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