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| Logos of Swiss banks UBS and Credit Suisse are seen in Zurich, Switzerland on March 20. Reuters-Yonhap |
Swiss bank absent in bidding for advisory role in HMM deal
By Anna J. Park
As talks continue over UBS' acquisition of Credit Suisse, questions are being raised about the Korean operations of the collapsed Swiss bank, which has long been known for its unique forte in investment banking (IB), particularly in the M&A market in Korea.
Market watchers view that the acquisition will result in a major cut in Credit Suisse's Seoul office personnel, who mostly have strengths in the IB business. This is expected to subsequently create a massive shift in experienced IB professionals in Seoul, once the specifics of the deal take shape by the end of this year.
According to media reports and industry sources, the IB section of Credit Suisse's Seoul office is facing major personnel cuts, as UBS has decided to reduce the size of the newly-acquired branch. Sources say that appears to be the reason why Credit Suisse did not participate in a recent bid to select the financial advisor for an estimated four trillion won ($3.1 billion) sale of HMM, Korea's largest shipping company, which is expected to be one of the largest deals this year.
Prior to the announcement of the acquisition deal earlier this month, the global headquarters of Credit Suisse had originally planned to spin off its IB business as Credit Suisse First Boston (CSFB), according to the Swiss bank's strategy announced last October. Credit Suisse's Seoul operation was expected to undergo a reshuffle with the spin-off plan. Yet, with the sudden takeover plan, the spin-off plan itself is now highly likely to be scrapped and the fate of Credit Suisse's Seoul office also remains uncertain.
Regarding market rumors about an impending downsizing, Credit Suisse told The Korea Times that it cannot share specific details for now.
"We have a proud history of serving our clients and we expect that to continue. We are encouraging colleagues to continue to the best of their abilities against a difficult backdrop. Our focus remains on serving our clients," an official at the bank said.
Currently, UBS' Seoul operation is focusing on securities, while Credit Suisse's Seoul business is centering on IB markets. As of the end of last year, the number of Credit Suisse employees at its Seoul branch's IB section stood at 98, which is almost double the size of UBS' 58 employees in Seoul. Credit Suisse also reaped 68.2 billion won in net profit last year, which is almost three times that of UBS. Credit Suisse has also been one of the top performers in local M&A league rankings, taking second place last year, far surpassing UBS' 10th place.
Given Credit Suisse's unique forte in the Seoul IB sector, the key personnel who led the troubled bank's IB business here are likely to leave the firm if UBS pushes ahead with downsizing steps. As a result, market watchers view that a major migration of IB professionals in Seoul will be unavoidable, as there is a shortage of experienced experts in the field and other local or global branches could possibly scoop them up.
Meanwhile, the Financial Supervisory Service (FSS) said it is closely monitoring and following structural changes in the Seoul operation of Credit Suisse, bracing for the potential impact on the local financial markets.
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