What caused the big drop in Credit Suisse's global markets jobs in the second quarter?

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Something seemed to finally snap at Credit Suisse's global markets division in the three months to the end of June 2018. After years of talk about restructuring and cost cutting, the Swiss bank's global markets job cuts apparently came all at once. - The CS global markets division ended the quarter with 350 people fewer than it began. While everyone was looking at Deutsche Bank, Credit Suisse was removing headcount from sales and trading too.

Or was it? Credit Suisse isn't commenting, but insiders at the Swiss bank say the disappearance of hundreds of staff from the global markets division was actually down to the reallocation of staff to different business areas within the bank. Where exactly is a mystery. - Credit Suisse as a whole was down 940 permanent employees in the past quarter and the only division to end the three months with more staff than it began was the corporate centre, which only added 10 people. Nonetheless, insiders insist that the global markets division only made "tens" of people redundant and hired over 20.  It's all rather opaque, particularly compared to the visibility of the cuts at Deutsche.

Credit Suisse's vanishing markets staff are all the more mysterious given the stasis in markets headcount previously. - Until these 350 jobs disappeared, quarterly headcount had been eerily stable for over a year, making the disappearance of hundreds of staff (albeit only 3% of the global markets total) in three months all the more remarkable. The bank is known to have cut 10 rates traders in the U.S. and London and CEO Tidjane Thiam today referenced cuts to the U.S. rates business in particular. Quiet cuts were also made to emerging markets and prime broking in both March and July. But 300 or so people remain unaccounted for.

As the charts below reflect, the vanishing jobs at Credit Suisse's markets division seem to have coincided with under-performance in fixed income trading compared to U.S. rivals (but not to Deutsche Bank). Thiam is unperturbed: in today's call he blamed last year's "uniquely strong" quarter in credit trading for the poor comparative quarter and said he was happy with the markets results overall.

Is this the end of job reductions (or disappearing people) in the markets division? Hopefully. Both Thiam and Credit Suisse CFO David Mathers said today that the restructuring at the bank is over, and that despite the fall in second quarter revenues there are no plans to cut costs below the established CHF4.8bn global markets target.

Even so, Credit Suisse's remaining markets professionals who want to position themselves for the future might want to think carefully. The best place to work at the Swiss bank no longer looks like institutional sales and trading, but the International Trading Solutions (ITS) division which serves up institutional products to private clients.

Thiam says ITS is being personally overseen by, head of the global markets division, Brian Chin, and is growing at a rate of 17% per year as high net worth clients seek to hedge their wealth in volatile markets. "They [ITS] are the most excited people in the bank right now. They are very happy, very excited, creating new products and meeting new clients," said Thiam. ITS are also, "very successful and this is what makes people happy," Thiam added.

While the markets division under-performed, Credit Suisse's investment bankers had an exceptional quarter: M&A advisory revenues were up 54% year-on-year. Again, this might have something to do the comparable quarter in 2017, when Credit Suisse's M&A revenues were down 24%, but Thiam didn't say so. - The strong M&A result was down to the bank's enlightened strategy of focusing on, "large cross border transactions," he said. Credit Suisse's investment bankers were rewarded with a 21% hike in compensation spending during the quarter as a result.

[Hover over the charts to view the results by bank.]

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