What future for the Asian empire of Helman Sitohang at Credit Suisse?

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Credit Suisse’s Asian business is set to undergo a major upheaval, and this could have important implications for corporate management and internal power structures in the region.

The bank would have considering changing its Asian investment banking division into its global advisory business, a move that would mark the end of the regional strategy launched by former CEO Tidjane Thiam.

In 2015, Thiam transformed Asia-Pacific into a dedicated business division with its own investment bank and advisory arm. The intention was to drive growth by offering more trading products and capital markets to its Asian billionaire clientele.

There are several reasons why Credit Suisse is now looking to rebuild its global investment banking business. First, it’s the next logical step after CEO Thomas Gottstein established a global investment bank in July 2020, bringing together the former Investment Banking and Capital Markets (IBCM) and Global Markets (GM) divisions as well as the Asia-Pacific markets (APAC). The Markets Division was the hub of investment banking in Asia, so integrating IBCM into the fold completes this process.

The move will centralize and simplify the bank’s operations. Chairman Antonio Horta-Osorio is currently undertaking an in-depth review of the group’s operations following losses associated with the collapse of Greensill and Archegos Capital. Horta-Osorio has already reorganized and strengthened the risk management function and in July hired executives, including David Wildermut of the Goldman Sachs group, to become chief risk officer.

Change in Asia is long overdue. Thiam’s convoluted structure was both unique among the major Western banks and difficult to understand. The globalization of the investment banking and advisory activity will facilitate management and should also strengthen collaboration between regions.

Credit Suisse’s Asian power base

However, dismantling Thiam’s structure may not be popular with everyone at Credit Suisse. The man with the most to lose seems to be Helman Sitohang, the CEO of the Indonesian group for Asia-Pacific which has a large power base and considerable influence.

Sitohang was promoted to lead Credit Suisse’s Asian business in 2015. He has been a strong advocate for Credit Suisse’s “One Bank” strategy, using its connections to billionaires in the region to land lucrative underwriting and advisory mandates. Sitohang’s credentials to making rain are widely recognized – he is credited with is credited with more than $ 200 billion in transactions and capital raising in 22 years at the Swiss bank, according to Swiss website fines.

But he has also been close to recent controversial clients of the bank and has been one of Lex Greensill’s biggest advocates, seeing him as an ideal client – an entrepreneur with points of contact throughout the bank.

In 2020, the bank generated revenues of 3.1 billion Swiss francs in APAC, an increase of 4% compared to 2019, but far from its best performance of 3.8 billion Swiss francs, delivered in 2015, inaugural year of the new structure. The workforce rose from 6,890 to 6,890 over the same period, according to the bank’s annual report.

Credit Suisse does not provide a breakdown of income in APAC purely derived from IBCM, but does have a reporting line called “transaction-based income”, which covers M&A trading, underwriting and advice. . This generated 1.6 billion Swiss francs in revenue last year, just over half of the total revenue generated in the region.

The bank ranked fourth in M&A revenue in the APAC region in the first half of the year, compared to the first a year ago. In investment banking, it was ranked eighth in underwriting and advisory fees for international business in China, down from second a year ago, according to Dealogic data.

It is conceivable that very little will change in the new structure. Credit Suisse operates the same matrix structure in Asia-Pac as in other regions, with dedicated sector and country heads, overseen by regional management –Zeth hung and Ed Low are IBCM co-leads for the Asia-Pacific region and are expected to continue in their roles. Credit Suisse has also just completed a redesign of its range of investment banking services in the region, making a series of promotions in a move seen as the bank promoting its next generation of bankers. He also embarked on a major expansion in mainland China, where he became the majority shareholder of his joint venture in June 2020 and appointed Janice Hu CEO in July 2021.

However, there will no doubt be savings to be made by removing the operational management roles. And DDepending on whether the plan is approved and what it looks like, investment bankers from CS to APAC might have less leeway to support clients if they are dependent on the investment bank’s balance sheet, rather than the one available in the bank. region.

It remains to be seen what this means for compensation. As a member of an autonomous Asia-Pacific group, IBCM’s bonus pool is dependent on the performance of the regional entity and will have performance criteria linked to the region. Transferring it to the global investment bank could mean that bonuses could be measured against different criteria.

Overall, the biggest winner from the proposed strategic overhaul will be Christian Meissner, CEO of the investment bank. With the addition of Asia, Meissner will have a larger and more clearly defined empire. As for Sitohang, who along with Gottstein is the only surviving member of the board appointed by Thiam during the 2015 restructuring, it remains to be seen whether his role will shrink along with his responsibilities.

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