Credit Suisse & UBS bankers are quietly bonding, becoming friends
Credit Suisse is legally merging with UBS within weeks, but it won't cease to exist when it does. In this week's announcement of the coming union, Credit Suisse CEO Sergio Ermotti said that the two banks "will continue to operate independently for the foreseeable future." Credit Suisse will still be subsumed, but in phased fashion.
This means that if you're a banker or a trader at Credit Suisse or UBS now, you are in the somewhat awkward position of working alongside colleagues that are hypothetically, also, your competitors.
So, how's that going?
Fine, according to one Credit Suisse managing director in London. "People in each industry or M&A team already know each other well," he says, speaking on condition of anonymity. "It's therefore just a matter of being well-coordinated. We're running in parallel and senior people can speak and avoid any situations quickly."
What kinds of situations? - Competing for the same clients, working on opposite sides of the same deal; the permutations are various. Credit Suisse declined to comment on the mechanics, but the MD said the two banks' conflicts teams - which are tasked with avoiding such situations, are being merged as a matter of urgency.
In capital markets and investment banking, the big question will be who takes priority on deals. UBS clearly has the upper hand, and its bankers might be expected to supersede Credit Suisse's. However, last year Credit Suisse bankers were stronger than UBS bankers across sectors like FIG, healthcare and utilities. Historically, Credit Suisse has also had the upper hand in technology M&A.
There is room for dispute. Irrespective of recent performance, one US Credit Suisse veteran argues that Credit Suisse bankers are higher caliber than their UBS colleagues, and that UBS bankers should therefore cede deals to them. "Credit Suisse has been unable to win business while it's been under various clouds for the past two years, but if you look longer term, then Credit Suisse is usually in the top five or six. UBS is more likely to be in the top 15 - and that's in a good year," he says.
In sales and trading, running the two businesses in parallel is likely to be a more complicated affair. UBS has made it clear that it intends to continue pursuing a capital light model, which is unlikely to be compatible with Credit Suisse's strength in credit trading in particular. One senior insider said merging the two banks' middle and back office functions will be horribly complex, particularly as Credit Suisse has been losing staff. "Our back office is struggling with manpower as a lot of people left," he says.
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