Credit Suisse has become the latest bank to cut its Asia head of its transition management (TM), raising further questions over the industry’s future, even in its regional stronghold of Australia.
It is understood that Tom Wyse is now on garden leave, having joined as Asia-Pacific head of TM from Deutsche Bank in April 2010. He was a vice-president and exited towards the end of last year.
His remit had been to build an Asian TM business based out of Sydney. Australia has traditionally been one of the leading markets for TM based on the A$1.5 trillion superannuation industry.
Asset owners use transition management to rebalance portfolios, change investment style or switch managers due to underperformance.
However, Wyse admitted last August that TM activity in Australia had been down 20-30% for a year or two. He was quoted in an AsianInvestor scoop on a fresh round of industry layoffs, which included the Asia heads of transition management at both Deutsche Bank and JP Morgan.
“[The cutting of TM teams] is probably down to a combination of the Asian TM business not growing as quickly as many would have anticipated and transition activity being down due to macroeconomic factors,” he had said at the time.
“Liquidity is still very tight, flows are down, commissions are down, everything’s down. It is not a conducive environment for switching large amounts of money between asset managers.”
A number of investment banks have chosen to pull back from transition management as it is not a flow business, with a centralised facility touted as a suitable model.
In recent times some have chosen to consolidate Asian coverage out of Australia. However, Credit Suisse says its TM coverage will be handled out of the US, London and Hong Kong from now on.
In that sense CS appears to be following the offshore model of BNY Mellon and Morgan Stanley, which cover their Asian TM business out of either the US or London in the absence of a regional TM head.
Asked whether Wyse would be replaced, a spokeswoman for Credit Suisse says: “We are looking at an internal pool of people, but we would also not rule out an external hire. This is a specialist area. We have informed clients [of Wyse’s departure], and we have not suffered any loss of clients. In terms of service delivery, we continue to do business with them.”
But a source close to Credit Suisse points to uncertainty internally over whether any additional resources will be dedicated to its Australia TM business. AsianInvestor understands that Victoria Shelton, who was added to the Australia TM team in Sydney last February, left shortly before Wyse.
Another source adds: “The whole industry has been in the mode of adjusting capacity to the business prospects. It is not surprising that Credit Suisse is looking for an economic way of operating the business.”
Industry insiders note that Credit Suisse has been a TM player in Australia for less than five years and as such is relatively young, with its market share dwarfed by Citi and Goldman Sachs.
Apart from its operations in the US, London and Hong Kong, some of Credit Suisse’s TM admin functions such as currency settlement, account opening and database monitoring are handled out of Singapore.
A feature on transition management strategies by Asian asset owners is due to appear in the forthcoming March issue of AsianInvestor magazine.