One can’t help but notice the fact that a string of top-level employees have decided to leave Credit Suisse (NYSE:CS) in the recent weeks. At least 3 top bosses and 3 veteran brokers at the second largest Swiss bank have decided to pursue other career opportunities in the last month. This is a worrisome trend as the bank has been focused on streamlining its business model in recent quarters and all the exits have been in businesses that Credit Suisse intends to strengthen in coming years – making these roles all the more important for the bank.
We maintain a price estimate of $27 for Credit Suisse’s stock, which is about 35% above the current market price – the effect of a major sell-off in European bank shares over recent weeks due to Greece’s possible exit from the euro and the possible impact of this event on the global economy.
Late last month, Credit Suisse announced the departure of its then Chief Information Officer (CIO) Karl Landert.  This was followed by the decision of the bank’s global mergers & acquisitions head Boon Sim to leave his position.  And more recently, the bank had to let go of Ravi Singh, the chief of its alternative asset management unit.  The bank is currently looking for replacements for those named above, with responsibilities of each of the three posts being handled by someone on an interim basis.
Also on their way out are seasoned brokers Bob Constant, Jeryl Paris and Mark Bilski who have an experience of around 30 years each in the wealth management business. 
Credit Suisse has been under fire from investors in recent quarters over the decline in performance of its cornerstone wealth management business. The business reported a loss in Q3 2011 and did not see a notable improvement in Q4 2011, although competitor UBS fared much better over the same period under similar tough economic conditions.
And key employees leaving the bank is only going to make things more difficult for it to get things back on track. We do believe that the bank’s rather stringent cost cutting measures for the year 2011 have a big role to play in the exits (see Credit Suisse Mulls Big Pay Cuts as Euro Crisis Hobbles Bank). Credit Suisse would really need to understand the reason behind these high-profile exits and plug them, lest the very sustainability of its business model comes under threat.Notes:
- Karl Landert to step down as Chief Information Officer of Credit Suisse, Credit Suisse Press Releases, Apr 27 2012 [↩]
- Credit Suisse Global M&A Head Boon Sim Leaving For Temasek, Bloomberg, May 16 2012 [↩]
- Credit Suisse Loses Alternative Asset Chief Ravi Singh, Bloomberg, May 25 2012 [↩]
- ON THE MOVE-Credit Suisse brokers leave for Jefferies, UBS, Reuters, May 23 2012 [↩]