Have you got lost following the story of Credit Suisse’s investment bank? It’s ok: the bank itself has signposted its strategic development with a lot of bubble charts showing what it likes and what it doesn’t. These charts are available for the past four years and seem to be a favourite of chief executive Brady Dougan, who’s been in charge since 2007.
Below we have the bubble-history of investment banking at Credit Suisse. Matters are complicated by a change in the formatting of the bubble charts around 2012 to emphasise returns instead of revenue growth (itself a reflection of the changing nature of the banking industry), but still – you get the idea.
In 2009: Rates and commodities are it. M&A isn’t
Remember 2009? After the financial crisis, rates and commodities businesses were all the rage (at Credit Suisse), as the chart below from Credit Suisse’s fourth quarter presentation shows.
In 2010: Rates and commodities fading, leveraged finance and emerging markets fortifying
One year later, rates and commodities hadn’t lived up to their promise. Revenues in both businesses were falling. Emerging markets, leveraged finance and (maybe) equity derivative were the new new things.
In 2011: Bubble chart hiatus
There was no bubble chart for 2011. No one knows why.
In 2012: Commodities and FX blacklisted. Global credit products and prime services are the new favourites
In 2012, bubble charts were back – but they were different. Now they focused on return on capital and market share (rather than revenue growth and market share). On these measures, global credit looked good, as did prime services. FX and commodities both looked very bad. Rates was clearly falling out of favour.
In 2013: Global credit, cash equities and equity derivative are it. Prime services, emerging markets and global macro products are not
In the final installment of Credit Suisse’s bubble chart odyssey, released today, global credit remains hot but prime services are getting tepid. Commodities, FX and rates have seemingly disappeared – subsumed into a whole new unpopular category called ‘global macro products’. Cash equities are heating up, so are equity derivatives. Bubble-wise IBD doesn’t look too bad either.
We await the next installment, probably coming at the end of the first quarter.
