The impact of the recent Archegos scandal continues to send shockwaves throughout Credit Suisse. The recent number of resignations have included managing directors and vice-presidents, particularly from the company’s healthcare services arm.
As of October 20th, Credit Suisse has lost nine directors over the past five months. Eight of the nine were based in the United States, and the ninth was from the United Kingdom. Seven of the US contingent were part of the healthcare services team. The eighth was a member of the mergers-and-acquisitions team, but also had industry connections related to healthcare.
Four of the bank’s managing directors in the US have also tendered their resignations, the most recent of which was a life sciences MD who left the company on Wednesday, October 20th.
The financial aftermath of a scandal
The recent debacle involving Archegos is just the most recent in a number of scandals that have hounded Credit Suisse over the past few years. However, it has also been one of the company’s most expensive mistakes. As of press time, Credit Suisse has lost approximately $5.5 billion from the implosion of Archegos.
While the bank’s investment banking team was not involved in any of the decisions or transactions which resulted in the scandal, the cumulative losses have significantly reduced bonus compensation for senior Credit Suisse executives.
But it is the bank’s healthcare group that is paying the price for its folly, as – surprisingly enough – it was hit much harder than either the energy team or the financial institutions group. Many of the resignees packed up during the summer, between the months of June and July, and have since been accepted into new positions in other companies.
According to an industry recruiter, the recent departures from the Credit Suisse healthcare team is expected to slow down any hiring initiatives that the company plans to implement over the next few months. Indeed, the group’s med-tech companies arm was almost completely decimated by the en masse departures.
The exodus also comes at a critical time: deals related to healthcare companies and facilities are at an all-time high and other financial institutions are scrambling to get into the action. As of October 2021, there have been over 4,500 mergers and acquisitions related to the healthcare sector, amounting to over $414 billion in all. Likewise, this year’s spate of 274 healthcare-centric IPOs have collectively generated proceeds in the excess of $50 billion.
According to British-American financial market data firm Refinitiv, Credit Suisse is currently the eighth top financial advisor with regard to mergers and acquisitions in the US healthcare sector, advising on ten transactions for a total of $24.5 million in deal volume. However, in recent weeks, the bank’s shares have plummeted by almost 30% since March of this year. According to some bankers, if stock prices do not return to healthier levels soon, the impact may be felt in the company’s future earnings.
For now, however, Credit Suisse is hard-pressed to retain its remaining executives, seeing how the departure of so many senior offices and increasing doubt from its customer base are making other employees consider flying the coop as well.