LONDON, March 8 (IFR) - Senior Credit Suisse managers stress that emerging markets remains one of the key pillars of the bank’s strategy despite another departure of one of its debt bankers covering the asset class.
Paul Hawker, who headed corporate and emerging markets debt capital markets for the EMEA region, has left the firm to join HSBC. He also co-headed the liability management business for the region. His departure follows those of other experienced emerging markets debt bankers over the past year, including Neil Slee, Marco Huber and Michael Schoen.
In light of these departures, rival bankers question the Swiss firm’s commitment towards the emerging markets, especially in the debt capital markets.
But bankers there say emerging markets is as important as ever to the firm.
“Emerging markets is a critical pillar across the Credit Suisse franchise,” said Paul Tregidgo, vice chairman, debt capital markets. “And within the investment bank, EM debt capital markets remains an important part of the strategy.”
He points to Credit Suisse’s recent record in the public markets across the spectrum of credits, including bond deals for America Movil, Davivienda, Minerva, Gazprombank, Alfa Bank, Kaisa and Biosensors International among others as evidence of the firm’s origination and execution capabilities. He adds the bank is also very active in private transactions, be they bilateral financings or structured trades.
“In emerging markets, we play to the considerable strengths of the broad Credit Suisse franchise. We’re very focused in the core emerging market geographies,” said Tregidgo.
Like its Swiss rival, UBS, Credit Suisse faces onerous capital requirements, which means it cannot afford to have an all-encompassing business model.
Thanks to Basel III, Credit Suisse is restructuring across the investment bank and wealth management business as the group seeks to cut costs by CHF4.4bn by the end of 2015. The bank has also shrunk its balance sheet to CHF924bn as it seeks to get below CHF900bn by the end of the 2013. The firm has cut Basel III risk-weighted assets to CHF293bn, close to year-end target of CHF280bn.
Yet despite all this, the firm is a top-10 bookrunner for all international emerging markets bonds year-to-date, according to Thomson Reuters, though league table rankings are not the main priority.
“Our strategy in emerging markets is targeted across markets and sectors but it is focused on profitability,” said Sandeep Agarwal, head of debt capital markets, Europe, Middle East and Africa.
Another issue that rival banks have jumped on is that many of the departures have spent several years at the firm and that their moves to other houses has left Credit Suisse short of experienced emerging markets professionals.
“The end of their CEEMEA debt capital markets business?” asked one banker when he heard about Hawker’s departure.
The firm’s bankers strongly reject that notion, pointing out that region alone is covered by Agarwal, Tregidgo and Chris Tuffey, co-head of credit capital markets for EMEA, among others, all of whom have considerable emerging markets’ experience. It’s the same for Latin America and Asia.
“There’s no shortage of EM debt capital markets DNA at this firm,” said Tommy Mercein, global head of debt capital markets. “As we go through the nuances of the re-organisation, one thing we don’t have is a shortage of people who know the emerging markets business.”
Agarwal added that it’s not just at senior level that the firm is well-resourced. He stressed the firm has a deep pool of talent at mid and junior levels too.
Tregidgo said that, while the firm’s emerging markets strategy has evolved over the years because of the changing regulatory landscape, the debt business remains successful. “Our emerging markets financing business is vibrant.”
Reporting by Sudip Roy; editing by Alex Chambers