Can you tell us what your role in London was, prior to your transfer to Asia?
I was co-head of our financing businesses in Europe. That included ECM and DCM, equity derivatives, debt derivatives, leveraged finance and origination. But my day job was really looking after the equity side of that business, meaning ECM and corporate equity derivatives.
Actually Europe has a mixture of mature markets and not so mature markets û if you think about areas like Central and Eastern Europe, Russia, and Turkey. So the transition has been quite straightforward. In my career I have been head of Latin America as well as head of Central and Eastern Europe, Middle East and Africa and at many times these regions were booming. So the dynamism here is not that surprising to me or frankly that different from what I am used to.
The one thing I have become aware of is Asia does not exist û for lack of a better word û as a generic region. The business issues that you have to deal with in China, could not be more different than those you are dealing with in Taiwan, or, Indonesia or Singapore. They are far more different than my experience of doing business in France versus Italy. I find it a disparate region, with different business dynamics and different challenges. So itÆs hard to generalise. I am approaching Asia almost one country at a time.
The markets here are currently booming. Do you have a positive outlook on the region and the potential growth of the investment banking business?
I wish I had a crystal ball and knew what the outlook was like. There is no question that the market forces that have been unleashed in China are at an early stage. And yes, I think at some point we will have a correction in ChinaÆs markets, which have already gone up a lot. But at some point, quite frankly, I believe we will see the market pull back globally, and that will include this region. Having said that, there are secular growth trends in China that will last for some years to come. So the outlook for business in Asia is pretty good.
You mention China, but the other big market in the region is India, where Credit Suisse historically has a few problems. What are your plans for rebuilding the business in India?
We just had our brokerage license approved in India and our merchant banking license. We have a 12 person investment banking team now on the ground and we are very focused on that market opportunity. It is a big market, with big opportunities, but it is early days for us. We are focused on specific sectors and there is still so much to play for. It is a young market, but unlike in mature markets, we donÆt see the lead other banks currently have as entrenched. So we are quite hopeful about our business in India.
Would you say that India is the biggest gap in the Credit Suisse franchise in the region?
Probably. That is fair. But it is one we are very committed to and where we are already beginning to see a pipeline building. I am pleased to say that we have just priced our first equity capital raising for HDFC Bank.
So apart from India, what are the other areas of growth that you are looking to push?
There are three themes in the market that have developed recently. And the first is the fact that the fee pool has grown now to a critical mass. It has more than doubled in the last three years. The second is that the client base is becoming much more sophisticated than they were five years ago. The third is the clients in Asia have a much more global outlook. They may not always be doing investment banking transactions globally, but they still want to know what their peers are doing in other parts of the world.
So I think if you believe those three observations, the implications are self evident. It implies more specialisation. If the fee pool is larger, there should be more specialisation by sector, and by country and by product. And probably, for some key clients, we need to step up our existing coverage rather than taking a more opportunistic approach. The third thing is you need more industry content. Obviously the country banking dimension is still very important but you need to provide more industry content to that client base. So where are we investing? Certainly in FIG, where the fee pool has quadrupled in three years, as well as in our technology coverage. And with two thirds of the worldÆs population here, the consumer goods and retailing sectors will continue to be a growth area. And finally of course, energy and sub-sectors û gas, coal, metals and mining and alternative energy. Those are some of the key sectors we are looking to build on. In terms of other opportunities, I think structured lending is going to be an important area,; as well as the expansion of the emerging Chinese mid-cap client base. And probably corporate equity derivatives û that is a business we have done well in in Europe û and we expect to do well in this area in Asia too.
One business where the fee pool has gone up is in G3 public bond issuance. Is that an area that you, for profit reasons, will be less interested in?
We are interested in one thing, which is serving our client base. So we cannot tell our clients that we donÆt do certain things. So we will stay in that business. We are very active in the area and will continue to be so.
A lot of investment banks in Asia are doing more and more syndicated investing û where they co-invest with hedge funds in the deals they lead manage or structure. Is that an area which Credit Suisse will ratchet up?
Yes, and thatÆs what I meant by structured lending. ItÆs an important area. We do have a strong presence in this area, particular in Southeast Asia where in Indonesia we are particularly strong. I think we just need to use those product resources more broadly in more countries and leverage that existing product knowledge.
China being the key country?
Yes, the China mid-cap sector offers great potential for syndicated investing via structures such as pre-IPO convertibles. The high yield market has also started to be more active in ChinaÆs real estate sector. ItÆs an area where we are going to raise our game and employ the right resources.
Clearly the difficult bit with syndicated financing is hiring good staff that can do it. Is that a big challenge for you guys as well?
Frankly, that is a challenge across the board. In fact, I am not as worried about staffing in this area. We have a pretty good syndicated investing team. I am not overly concerned about that. But hiring generally in Asia is tough. ThereÆs generally a shortage of people with the right skill-sets, and that has been made worse by the boom in China. But we have aggressive plans. We have hired 60 people so far this year across Investment Banking and we plan to add up to another 65 by the end of 2008.
And we are committed to be being the employer of choice by offering customised experiences and career tracks for each one of our bankers. We think that makes for a compelling case to potential recruits.
You have just hired staff on the convertible bonds side. Is that an area of growth too?
Yes, thatÆs an area we can do better and we very much focused on doing better. We will probably marry this with our intent to invest in the corporate equity derivatives area to provide financing and derivatives solutions to clients on an integrated basis. ThatÆs how the team in Europe came together and it became the most successful corporate equity derivatives operation in Europe.
The other big strategic question for investment banks is ChinaÆs domestic market, and being able to execute A-share business. Obviously Goldman and UBS are already doing this via their joint ventures. What is Credit SuisseÆs outlook on this and on getting into that business?
We are reviewing the situation right now. We think itÆs an interesting market opportunity. We are examining certain investment opportunities and we will be making some decisions pretty shortly. It is clearly something that merits careful consideration and given the size of the market in China, one that we cannot ignore.
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