Michael Klein is one of the most talented and successful investment bankers of his generation. Thanks to Credit Suisse, he seems to have pulled off another coup.
Since 2018 he has served as a non-executive director of the troubled Swiss banking group and, for the last few months, he has been a member of an ad hoc committee advising the board on the strategic options for its investment bank.
The committee’s proposal was to spin out the advisory and capital markets activities into a separate unit under the revived CS First Boston brand.
The idea is that this will give the new company focus and the ability to incentivise staff by offering them equity in the business and a “partner-like culture”.
READ Credit Suisse’s First Boston spin-out bets boutique pay model will keep top dealmakers
The job of chief executive of this new firm must be one of the most exciting – and potentially rewarding — in global investment banking. Presumably, the board thought long and hard about who would best fit the role.
As luck would have it, they eventually decided that the best candidate was actually sitting right in front of them – Michael Klein.
In one sense it is an odd move for Klein. The 57-year-old had a brilliant career at Citigroup, eventually becoming chair of the markets and investment banking division in the run-up to the global financial crisis. Somehow Klein managed to escape much criticism for the billions of dollars of losses incurred by the business, which led to a government bail-out and spectacular losses for shareholders. Klein left Citigroup in 2008 with a reported pay-off of $42m and almost immediately earned $10m for two weeks’ work advising Bob Diamond on Barclays’ purchase of Lehman Brothers’ US operations.
Since then, he has run his own boutique advisory business, which has been involved in some of the biggest global deals of the last decade. More recently, he was a prominent player in the Spac bubble.
Over the years he has presumably turned down countless offers to go back to work for or run other investment banks. So it is unclear what has persuaded him now.
READ Credit Suisse to slash 9,000 jobs, hive off investment bank in radical overhaul
It could, of course, prove very lucrative, but he can hardly need the money. Perhaps he has had enough of working largely behind the scenes and would like a bit more limelight. Or maybe he is just attracted by the challenge of restoring the lustre to the First Boston brand.
Whether it will work is also unclear. Credit Suisse says the new business will be “more global and broader than boutiques, but more focused than bulge bracket players”, which puts it right in the uncomfortable middle ground where conventional wisdom suggests it is very difficult to thrive. The new firm’s relationship with the trading business retained by Credit Suisse will certainly need careful handling for both sides.
The plan will doubtless be profitable for top dealmakers lured to the new firm with big share packages. Whether it will be as rewarding for Credit Suisse investors remains to be seen.
To contact the author of this story with feedback or news, email David Wighton