Comment: Credit Suisse talks big on hiring but is it sustainable?
Few wealth managers are raising their head above the parapet and proclaiming wholesale expansion plans in the current economic and financial turmoil. The one exception looks to be Credit Suisse.
Walter Berchtold, the bank’s head of its wealth unit, is leading this charge for the Swiss bank, saying his unit wants to recruit 1,000-plus private bankers globally during the next few years to add to the already 3,370 relationship managers employed by Credit Suisse.
Berchtold believes the credit crunch providing a widow of opportunity to recruit disgruntled private bankers from competitors, especially in the US, where much attention is been given to expand the bank’s wealth operations.
Not surprisingly, rich picking grounds for Credit Suisse in the US have been UBS, Lehman Brothers and Merrill Lynch – all banks hit hard by the credit crunch.
Berchtold strategy looks to makes sense - the boom in hiring private bankers has waned as the credit crunch has intensified, making them easier, and cheaper, to hire now than a year ago.
Credit Suisse has more cash to hire as well – it has been less savaged by the credit crunch than many of its competitors.
But this strategy sounds remarkably like what its great rival UBS did during the difficult years of 2001 and 2003, after the bursting of the dotcom bubble.
Back then UBS recruited more than 1,000 client advisers for its European wealth management efforts, growing especially fast in the UK and Germany. The bank paid a lot less for these client advisors than it would have had to a few years later.
Today, some question whether UBS might have grown too rapidly in these markets when it has been upset with morale difficulties among some of its wealth management staff and departures have accelerated.
Berchtold would be wise to consider the longer term consequences of too many hires, or else face the possible consequences of Credit Suisse’s competitors poaching with ease from its ranks in a few years time.
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