Swiss Banks Take Brunt of U.K. Brain Drain

By Ben Wright, Max Colchester and Richard Partington 

It is becoming a familiar rite of passage for London-based investment bankers.

An increasingly steady stream of deal makers has entered public service to help the U.K. government in its continuing effort to deal with the fallout of a banking crisis which saw taxpayers pump over GBP100 billion ($1.66 billion) into the sector. Among the banks that have lost the most brainpower to this trend are two Swiss banks: Credit Suisse and UBS.

The most recent "loss" is Ewen Stevenson, formerly the co-head of Credit Suisse's investment bank in Europe, the Middle East and Africa. He was today unveiled as the new chief financial officer of Royal Bank of Scotland, the U.K. government-controlled lender. Chris Wheeler, banks analyst at Mediobanca, suggested that Mr. Stevenson's move, after a 25-year career with Credit Suisse, was akin to "public service" in helping RBS recover from the financial crisis.

While in the U.S. there is a long track record of bankers heading into government, in the U.K. this is a relatively new phenomenon. In recent years the British government has increasingly looked to tap private sector know-how for advice on a range of issues, says Giles Williams, a partner in KPMG's regulatory services practice. Meanwhile for bankers it offers the chance to burnish their CV. It "gives them an opportunity to see things through a different lens," he says.

Mr. Stevenson's departure follows the appointment of James Leigh-Pemberton, who had previously been chief executive of Credit Suisse's U.K. business, as the chairman of U.K. Financial Investments, the body that manages the government's stakes in bailed-out banks, last September. Mediobanca's Mr. Wheeler said that the Credit Suisse connection was probably part of the appeal of Mr. Stevenson for RBS: "They [Mr. Stevenson and Mr. Leigh-Pemberton] will have sat on the same exec committee at Credit Suisse, so [Mr. Stevenson] has some very strong contacts [at UKFI]."

The two Credit Suisse bankers were on the team that advised HM Treasury on the stabilization of the U.K. banking sector in 2008. This included work on the recapitalization of RBS and Lloyds Banking Group.

Among the other UKFI board members is Philip Remnant who once was vice chairman of Credit Suisse in Europe. He was also previously chairman of the U.K. Government's Shareholder Executive, a division of its Department for Business, Innovation and Skills that oversees state-owned enterprises.

Mr. Leigh-Pemberton replaced Jim O'Neil, who rejoined Bank of AmericaMerrill Lynch, and Robin Budenberg, a former senior executive at UBS investment bank, who was chief executive and then chairman of the UKFI for four years before retiring in January.

Christopher Fox was appointed the head of banking at the UKFI in the January management shuffle. He previously headed U.K. banks coverage at UBS while Lucinda Riches, another of UKFI's board members, worked at UBS and its predecessor companies for 21 years rising to become the Swiss bank's global head of equity capital markets.

UBS was involved in advising the U.K. government in the days leading up to the bank bailout before Credit Suisse was appointed the official adviser in the aftermath.

Meanwhile, Credit Suisse has moved fast to plug the gap left by Mr. Stevenson's departure. He will be replaced by Mark Echlin, co-head of the bank's global industrials group and longtime adviser to Glencore, and will work alongside Mr. Stevenson's former co-head Marisa Drew.

Write to Ben Wright at [e-mail], Max Colchester at [e-mail] and Richard Partington at [e-mail]

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