Morning Coffee: Credit Suisse probably doesn’t want to be Citadel Securities any more. Ex-JPMorgan analyst’s TikTok sex campaign
One of the things that makes investment banking such a fascinating industry to cover is the soap opera element – the way that you can see dynasties rise and fall over time. An example of this is the latest news from Credit Suisse. Anthony Abenante will be leaving the bank and his post as head of global equities will be split between Neil Hosie and Doug Crofton as global co-heads. This more or less marks the end of the era of top traders who came across from UBS after Tidjane Thiam hired Mike Stewart in 2016. As well as Abenante, the Clan Stewart included former head of prime broking Ryan Nelson and the sadly deceased flow equity derivatives star Ross Mtangi.
Abenante's exit also appears to mark a change in direction for the Credit Suisse equities business itself. When he arrived in 2018, it was with a view to making the bank a bit more like a Virtu or a Citadel Securities. Promoted as head of equities after Archegos, Abenante was always identified with the electronic side of trading. He spent most of his career in technology-adjacent roles, including five years as CEO of Instinet.
For a long time, electronic trading was part of Credit Suisse's DNA. Historically, the CS Algorithmic Execution Services team was at the very cutting edge of high-frequency trading. The Crossfinder “dark pool” system set the standard for execution in the late 00s and early 10s, and Credit Suisse was the top name to have on your resume if you were looking for a job in the new growth industry.
But times change, and technological leadership requires constant and ever more expensive investment. In 2016, CS ran into regulatory trouble; the eventual fine of $84m was probably less important than the management time the case ate up, and market share was steadily eroded.
The appointments of Hosie and Crofton suggest competing with Citadel and Virtu is less important to the newly reorganized Credit Suisse. One of them is a law graduate who speaks conversational Cantonese; the other is a former lacrosse star. Both men are likely to understand algorithmic trading – you simply can’t reach the top level in cash equities if you don’t – but it’s not part of their DNA.
The “major shakeup” of the Credit Suisse equities business that coincided with Abernante's arrival in 2018 may therefore have run its course. The nature of the trading game is that success breeds success – the more orders you have, the better you can match them. The virtuous circle of one year’s success financing investment in the next year’s technological superiority can easily go into reverse, particularly when you've closed your prime broking business and lost access to flow from hedge funds.
With Abernante gone, the newly reorganized CS Markets business is mostly going to concentrate more on high-touch trading and servicing wealth management, rather than continuing to try to win the technological arms race with electronic trading firms. The rise and fall of CS electronic trading is in many ways a soap opera of its own.
Elsewhere, “Goodnight, Mate” is not just what a British capital markets guy says at the end of an evening’s client entertainment – it’s the slogan of Jordan Elist’s “male sexual wellness” brand, which you might be hearing in a promoted TikTok video some time soon. He has a bunch of supplements to sell, and a deep desire to destigmatize, get people talking, blah blah blah.
Like seemingly every other startup founder, of course Jordan’s a “former investment banker”. Or is he? The “investment banking career” from which he “saved a good amount” to bootstrap his new venture, seems to have consisted of one year and three months on the analyst program at JPMorgan in 2017/18. It also suggests that the stigma hasn’t been completely conquered; he doesn’t mention Goodnight Mate at all there, preferring to talk about his food company, Baaz Bites.
The banking industry should probably feel flattered. It’s not so long ago that former JP graduate trainees would be trying to cover it up and pretending they had always been entrepreneurs. The industry is now back to its mid-cycle position, seen as not exactly glamorous, but a good solid first job to emphasize.
Many people are motivated to get rich by a desire to buy their parents a dream home. Sam Bankman-Fried apparently managed it with a $17 million holiday villa in the Bahamas – the proud mum and dad are now apparently “trying to return the deeds to the company”. (Reuters)
Legendary risk manager Rick Bookstaber reminisces about the good old days of Salomon Brothers. He has some pretty critical assessments of the merger with Travelers Group and Sandy Weill, but interestingly has nothing but good things to say about Jamie Dimon. (Stories.Finance)
Snitches get nothing, it seems. The United States Supreme Court has finally decided in the case of former mortgage bond whistleblower Victor Hong, and they’ve said that his tips went not to the SEC (which might have entitled him to a share of the fines as large as $490m) but to the Department of Justice (which entitles him to zip). It’s not always easy money. (Reuters)
Binance is getting good at coming up with reasons not to bail out troubled crypto competitors – it’s apparently decided that there are “conflicts of interest” and so sadly won’t be putting any money into Genesis. (WSJ)
The CS restructuring continues to execute – about half of the research department and a third of the investment banking team based in China have gone. (Reuters)
It’s apparently going to be awkward at Thanksgiving dinner for people who told their relatives to get into crypto this time last year (Bloomberg)
Sequoia Capital might have caught the new spirit of the age in VC investing – rather than trying to style it out with comments about dreaming big, the firm has shown “a rare moment of contrition” and promised its investors that it will do better due diligence next time. (WSJ)