SPAC Boom Drives Gains at Credit Suisse’s Investment Bank

Credit Suisse Group AG’s deal-makers came to the rescue of the investment bank for a second straight quarter after tapping into the boom for initial public offerings and blank check companies, compensating for lackluster trading results.

Capital markets revenue almost doubled in the final three months of the year to $843 million, driven by a tripling of equity capital markets revenue and fees from advising on mergers and acquisitions. At the fixed-income trading business, revenue was little changed from a year earlier, compared with an average gain of about 10% for U.S. banks including Goldman Sachs Group Inc. and JPMorgan Chase & Co. The smaller equities business also disappointed.

SPAC Boom Drives Gains at Credit Suisse’s Investment Bank

Credit Suisse benefited as the volume of initial public offerings in the fourth quarter jumped 49% from a year earlier to reach $139 billion. The Swiss bank was the most active IPO arranger globally during the period with a 6.9% market share, ahead of Morgan Stanley and Citigroup Inc., according to data compiled by Bloomberg.

It also took advantage of the boom in listings of special purpose acquisition companies, which raised a record $39 billion during the quarter, more than 10 times the same period in 2019. Credit Suisse was the No. 1 adviser on IPOs of such blank-check companies during the quarter with a 16.7% market share, ahead of Citigroup Inc.’s 9.5% share, the Bloomberg-compiled data show.

SPAC Boom Drives Gains at Credit Suisse’s Investment Bank

“We continue to see big demand for SPACs in the US but also increasingly in Asia,” Chief Executive Officer Thomas Gottstein said on a conference call. “In the short term we don’t see a slowdown, it provides an alternative to private equity and traditional IPOs.”

Credit Suisse’s former CEO, Tidjane Thiam, is among investors seeking to cash in on the boom with plans to raise $250 million
for his own SPAC.

Gottstein overhauled the once-separate investment banking and trading businesses into a combined division last year after both had been plagued by uneven results. Since then, the trading business has failed to keep pace with Wall Street peers, with fixed income and equities also in the third quarter trailing major competitors.

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