Could Phil Vasan return to the alternative investment industry?
The sale of the US private banking operations of Credit Suisse to Wells Fargo, agreed last month, has created an opportunity for an imaginative alternative investment fund manager or investment bank to secure the services of the kind of talent that comes along rarely.
Phil Vasan is understood to be stepping down as CEO of the private bank once the transition to the new owners is complete. The news is not surprising, in the sense that Vasan is not a career private banker. He was put into the role in 2013 to restore the profitability of the business.
With that mission accomplished, and the business sold successfully, Vasan is expected to return to the investment banking or alternative investment management business. He was for ten years head of prime services at Credit Suisse, where he raised the market share of the firm from two per cent in 2003 to 14 per cent, securing it a top-two market position, by the time Brady Dougan invited him to fix the private bank.
Vasan will not be short of invitations from prime brokerage houses, almost all of which would benefit from his ability to take managing people, operations and clients seriously. But it would be surprising if he opted, after his private banking experience, for the cost-reduction, capital optimisation, client off-boarding and compliance projects that now dominate prime services.
Logically, only a leadership role with an obvious opportunity to alter the strategic direction of a bank would seem likely to tempt Vasan to return to banking. It is not clear whether the banks in the most obvious need of change, such as Barclays, Deutsche and Bank of America Merrill Lynch, are yet ready for the kind of transformative leadership Vasan would offer.
A likelier option for him appears to be to join a major alternative hedge fund management firm in a senior role. The larger and more thoughtful hedge fund managers that have survived and even thrived during the recent shake-out in the industry, and which are now looking to turn entrepreneurial money making machines into sustainable businesses, will know that Vasan is ideal for such a transition.
When Vasan ran prime brokerage at Credit Suisse, its annual client gathering in Florida was called the “hedge fund leadership conference.” Unlike most such events, the conference was packed with sessions, presentations and debates that aimed to help COOs manage their firms, while their colleagues in portfolio management got on with managing money.
The role of the hedge fund COO was invented to secure finance and middle-office services from investment banks. Vasan was the first to re-define the role as the individual who runs the entire non-investment side of an investment management firm. He saw early on the ability of better management – not just of liabilities, but of investors, internal talent, technology, risks and especially relationships with service providers – to add alpha. He was an early and strong advocate of best practices in the hedge fund industry.
Unlike most investment bankers, Vasan was always mindful of the personal and career development of his direct and indirect reports, too. Many people in prime brokerage acknowledge him as a mentor.
Nevertheless, leaving Credit Suisse ought to be a wrench for Vasan. He has worked at Credit Suisse for 23 years, originally joining the firm from Citi in 1992 to build the global FX options business of the bank before running global FX for four years. After a brief period as head of e-commerce during the dot.com years, Vasan also led the global equity derivatives and convertibles business at Credit Suisse in 2002-03.
He was described in the internal memorandum announcing his departure next spring, after the transition of the private bank to Wells Fargo is complete, as “one of the bank’s most accomplished leaders.” It may be a measure of how uncongenial banking has become that Credit Suisse is prepared to consider a future without leadership of that calibre. But what banking loses, fund management looks set to gain.