Awards for Excellence 2018
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Also shortlisted |
CIti |
HSBC |
| View full 2018 results |
Following a long period of restructuring, Credit Suisse’s prospects look brighter than ever before in areas where it has long excelled and, in particular, emerging market investment banking. Entrepreneurs in rapidly growing markets lie at the heart of the bank’s vision for its future; a sophisticated investment bank is a crucial part of its relevance to these clients.
The performance of Credit Suisse’s Asian division has underpinned growing investor confidence in its turnaround. Rising revenues in advisory, underwriting and financing – especially M&A and underwriting – contributed to a record first quarter in its Asian Wealth Management & Connected unit, which posted a return on regulatory capital of 36%.
Under group chief executive Tidjane Thiam, the Asian business has enjoyed greater autonomy and the scope to ramp up risk-weighted assets. That has allowed it to build on established operations in southeast Asia, especially in Indonesia, Thailand and Vietnam. The recent sale of Indonesia’s Bank Danamon to MUFG showed Credit Suisse navigating a deal of unusual complexity and sensitivity. Elsewhere in Asia it is also gaining momentum, notably in China.
Outside Asia, Credit Suisse retains a franchise of exceptional depth in large markets such as Brazil, Mexico, Russia and the Arab Gulf. This year it was global coordinator or adviser in some of the biggest and most important deals in those countries, including the London listing of Russia’s EN+ Group, new equity financing for Mexico City’s new airport and the merger of First Gulf Bank with National Bank of Abu Dhabi.
Dealogic’s league tables show market share gains across the board, with a particularly marked increase in equity capital markets. But even by comparison with the other prominent emerging market investment banks, its financing goes far beyond the public deals that Dealogic captures. Credit Suisse may not be leading all the investment-grade jumbo bond deals, yet it stands out for more complex, challenging and profitable accounts. As a result, it punches above its weight.
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| Larry Fletcher |
Looking beyond the obvious transactions has allowed Credit Suisse to build deep relationships in countries that are now part-and-parcel of any self-respecting global investment bank’s coverage network. Today, this capacity continues to help it build new relationships in the kind of less tapped markets that could be the UAE or Indonesia of tomorrow.
Credit Suisse’s commitment to frontier markets is particularly evident in Asia. Last year’s Vincom Retail equity offering – a deal of unprecedented size and foreign interest in Vietnam – was the fruit of a long-standing financial partnership. Its work is even more striking in Pakistan, where it has arranged a string of sovereign and corporate financings during the period, sometimes on its own.
Outside Asia, the business encompasses deals from Costa Rica and Suriname to Ethiopia and the Maldives. And as the bank has stepped up its hires of relationship managers to boost its wealth franchise in Saudi Arabia, its Arab-world business is extending beyond private banking to include big acquisition financings for telecom companies in Oman and Tunisia over the last year. It has also built up its coverage of sub-Saharan Africa.
“At a time when everyone else is pulling back from emerging markets, we are continuing to execute and successfully distribute deals in an array of countries that is only getting wider,” says Larry Fletcher, head of financing and structured credit, in Credit Suisse’s international trading solutions division.
Credit Suisse’s wealth management clients have been key to its success as an emerging market investment bank, not least because of the network it brings. A private banking relationship with a Turkish family-owned contractor might help it arrange a big transport infrastructure financing for a government in east Africa, for example, as happened last year in Ethiopia.
The private bank gives Credit Suisse an advantage over most of its investment banking rivals, not just because of the relatively concentrated nature of wealth in emerging and frontier markets but also because of the different priorities of private banking clients there. In general, private banking clients in emerging markets are more likely to want financing to grow their business, in contrast to the typically later-generation demands of wealth preservation in the developed markets.
Decades of experience have brought expertise, not least in the understanding of risk – using balance sheet where it makes a difference and not making knee-jerk reactions to political and economic events.
This means Credit Suisse has greater risk appetite in places like Africa than some much bigger corporate-focused banks. Recent examples include contributing $615 million to the central bank of Egypt’s most recent reverse repurchase transaction, doing more than almost any other bank to bolster the country’s currency reserves. And at a time when many other international banks have pulled back from Africa, it has provided more than $600 million in one-year financings, backed by government bonds, to banks in Nigeria.
