Credit Suisse equities business under the microscope after revenue crash

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At the grandiose Fontainebleau Miami Beach hotel, Credit Suisse hosted its top clients in October amid growing doubts it was still in the securities trading game after a series of high-profile blunders.

From BlackRock to CBOE Global Markets, investors and trading firms were treated to fireside chats with guests such as former US President George W. Bush, networking by the lavish hotel's beachside pools, and fine dining.

At the Fontainebleau hotel, Credit Suisse bankers were puzzled by the announcements, and concerned about their jobs being on the line, said the executive, who declined to be named. "No business is viable when its revenues vanish and expenses continue," said Peter Hahn, emeritus professor of banking and finance at The London Institute of Banking & Finance."Cost-cutting and efficiency can improve the profitability of a leading or even marginal business, but not a failing business."

Credit Suisse latest results showed, however, that revenue from buying and selling stocks and bonds slumped by 88% in the last three months of 2022 from a year earlier. But keeping the equities business in its streamlined form has not been the only option the bank has considered, according to one of the people with knowledge of the matter and a third source, who declined to be named.

By comparison, revenue from equities trading at five major Wall Street banks only fell 10% on average in the same period.Even after Credit Suisse stopped financing hedge funds following the Archegos implosion in March 2021, the equities business remained a key part of its investment bank revenue.

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