It's happening: Credit Suisse is cutting its credit trading team.
IFR claims today that Credit Suisse is cutting headcount in its credit trading business by 25%. Cuts will seemingly be focused on the smaller and less profitable European credit trading business, but the US will not be immune.
Cutting traders can be an expensive business. Material risk takers at Credit Suisse received salaries alone of CHF420k ($430k) last year. Credit Suisse typically pays severance packages of two weeks' salary per year of service. This is down from three weeks it paid prior to March 2020, but experienced traders with 10 years' experience at Credit Suisse could still expect to receive $83k in severance when being laid off.
Fortunately, therefore, traders have been leaving the bank without Credit Suisse having to pay anything at all. Headcount has already been dramatically reduced by voluntary exits which cost the bank nothing.
Credit Suisse declined to comment on the IFR report and has not given guidance on the reduction of the business. IFR claims that of the 25% of credit traders Credit Suisse wants to do without,15% have gone already. We've already reported heavily on Credit Suisse's credit trader exits. They include: Kru Patel, a director in corporate bond trading, who left in March for Barclays; Jonathan Moore, the global co-head of credit products at Credit Suisse, who left in May; Jonathan Fischer, a senior US credit salesman, who left around the same time; Mike Dryden, the former global head of securitized products finance, who left in April to set up a new structured finance team at Sixth Street; and Basil Eggenschwyler, head of credit trading in EMEA, who left in April to join Brevan Howard. Last week, high-yield head Daniel Brand and traders Brandon Porter and Ilya Feldman also left for Barclays.
Moore in particular was very popular at Credit Suisse. He reported into Jay Kim, the global head of fixed income products, who remains with the bank and who appears to inspire less loyalty among his reports.
Insiders say Credit Suisse probably has around 50 credit traders globally, but that the US has been hit by a huge wave of resignations. "All the good people in the US have left," says one. "70% of them have already gone."
This year's exits follow the previous departures of top traders like Hamza Lemssouguer in 2020 and David Goldenberg in October 2021. In combination, those two traders alone are thought to have generated around $450m in pnl for the Swiss bank.
Following this wave of departures, sources say Credit Suisse will find it very difficult to rebuild the credit trading business and that cost-effective passive shrinkage is the best bet. "They would need to aggressively rebuild under new management, but they're just sitting on their hands," says one trader.
During last month's wealth management and compliance-focused investor presentation, Credit Suisse made almost no mention of its sales and trading business and no one from the business was asked make a presentation. However, Francesco De Ferrari, head of the wealth management business, did very briefly say that Credit has a "unique trading machine," that it can't afford to lose.
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