Jim Amine has been chief executive of investment banking and capital markets at Credit Suisse since 2015. He began his career at the firm in 1997 working in high-yield capital markets and has long experience in leveraged finance.
He was co-head of global leveraged finance from 2005 to 2008 during the financial crisis and was instrumental in Credit Suisse being one of the few banks to cut its exposure early. Indeed, speaking to Euromoney in July 2007, he warned that: “There is the potential for a significant correction this year. The amount of liquidity could decrease materially.”
Talking to Euromoney again for this issue, he recalls the thinking at the time.
“We were concerned about leverage on some of these companies, the amount of forward underwriting commitments and the ability for the market to absorb all of this,” he says. “There was a huge ramp-up in 2006, but in 2007 there were record-breaking public to privates, which gave us pause – if something went wrong, if you couldn’t absorb it, what would it mean for the underwriting banks holding the commitments?”
The Swiss bank’s early action meant that it was well placed to exploit the gap in the leveraged finance market after the crisis with the disappearance of Bear Stearns and Lehman Brothers and the Bank of America/Merrill Lynch merger.
The business is now a cornerstone of the investment bank, one in which it has sometimes been seen as pushing at boundaries: Credit Suisse was one of a number of leveraged lending banks to receive a Matters Requiring Immediate Attention (MRIA) letter from the US regulators after the introduction of lending guidelines in 2013.
Amine’s experience means that he is relatively sanguine about today’s leveraged finance market and the chance that the mistakes of the pre-crisis years might come back to haunt it. But there are still areas of concern.
“I was surprised at the severity of the market sell off in December,” he reveals. “It was due to concerns about the economic outlook on the part of the buy side, fears of a Fed policy error and the obsession with predicting the timing of the next recession in the US.
“The US economy is nowhere near negative GDP growth. People were looking at a flat yield curve – a flat yield curve doesn’t mean that a recession is imminent. What’s changed? The Fed has said: ‘We think we are very close to neutral rates’, the outlook for 2019 is for reduced growth, so we need to wait and see.”