LONDON: Anyone can lose a client. But for Credit Suisse, the end of a 20-plus-year broking relationship with Rio Tinto comes at a difficult time. The Swiss group's shift in strategy under boss Tidjane Thiam towards private banking has already hoisted a question mark over the future of the investment-banking franchise.
There is only a partial link between corporate broking - where a bank provides ongoing advice on a company's relationship with its investors - and investment-banking fees. Corporate brokers tend to get guaranteed roles in equity issuance, such as Rio's $15.2 billion rights issue in 2009.
But there's less of a tie for merger advice.
Credit Suisse has earned $16.7 million from the miner since 2011, according to Thomson Reuters and Freeman Consulting. But it has netted $44.1 million advising rival Glencore over that period, despite not being its broker.
The bank's cosying up to Glencore may have been a factor in Rio Tinto's decision to shake up its roster. Credit Suisse co-head of investment banking Mark Echlin was named on a regulatory statement about the disposal of a Glencore business in April. But the sale was for an agricultural commodities business - not a sector in which Rio has operations.
The departures of Credit Suisse bankers James Leigh-Pemberton and Tristan Lovegrove, who managed the Rio relationship, may also have opened the door to Deutsche Bank , which has taken over as the miner's broker alongside JPMorgan.
Perhaps Credit Suisse could have done more to charm Rio Tinto's new boss, Jean-S?bastien Jacques.
Getting dumped as a corporate broker is normally part of the rough and tumble of investment banking.
But Credit Suisse's move to deepen cuts to its trading business this year after big losses marks this out as an unusually difficult year. Its bankers may feel they have been roughed and tumbled more than enough already.
Comments
Comments are closed.