Talent gap: A woman is seen passing by a Credit Suisse branch office in Switzerland. The crisis engulfing it has led to a number of its ESG bankers leaving the firm. — Reuters
LONDON: A senior investment banker at Credit Suisse AG says his team is actively seeking new deals in a rapidly growing corner of environmental, social and governance (ESG) financing, even as the future of the unit after the takeover by UBS Group AG is in question.
The Swiss bank stands out as a pioneer in a corner of ESG investment known as debt-for-nature swaps, a market that it has so far dominated.
But this year’s near-collapse and government-engineered rescue by UBS Group means that businesses in the loss-making investment bank are now being taken under the microscope for their fit into the longer-term UBS strategy.
Ramzi Issa, global head of credit investor products structuring at Credit Suisse, said his team still wanted to build out its debt-for-nature swap business after just concluding the largest ever such arrangement, a US$656mil (RM2.9bil) deal for Ecuador.
In that transaction, Credit Suisse bought some of Ecuador’s bonds at a discount and swapped them for a new, smaller loan in exchange for commitments from the country to protect its ocean life.
Credit Suisse financed the deal by issuing new marine conservation-linked bonds.
Ecuador’s record deal follows a US$150mil (RM674mil) swap the Swiss bank sealed last year for Barbados, and a US$364mil (RM1.64bil) transaction for Belize in November 2021.
In all, Credit Suisse “has retired about US$2.3bil (RM10.3bil) of debt and that’s been substituted with about US$1.2bil (RM5.4bil) of new financing,” Issa said in an interview.
“So, that is a lot of impact just on the fiscal side. On the environmental side, we’re talking about US$680mil (RM3.1bil) of funding for ocean protection that just did not exist before.
“We are actively looking at other transactions,” Issa said. “I’m very optimistic.”
A spokesperson for UBS didn’t immediately reply to a request for comment.
UBS has made clear that it intends to wind down much of Credit Suisse’s investment bank and will screen the remaining staff for their fit with its more stringent risk culture.
As the future of many bankers working at Credit Suisse is in doubt until the deal closes in the next few weeks, other banks have taken the opportunity to snap up experienced staff.
Competitors are also seeking to get into the business of debt-for-nature swaps.
Bank of America is set to arrange a US$500mil (RM2.2bil) swap deal for Gabon in the coming months. Deutsche Bank AG has also expressed interest in the market, as banks across Europe and the United States vie for a role in such deals.
The crisis engulfing Credit Suisse has led a number of its ESG bankers to leave the firm, with some following in the footsteps of Marisa Drew, who quit her role as chief sustainability officer at the Swiss Bank last year to take on an equivalent role at Standard Chartered Plc.
Drew recently told Bloomberg she’s keen to build out the StanChart ESG team, including through investments in biodiversity expertise.
The field plays a “critical role” in “protecting the world’s natural capital,” she said earlier this month.
Issa says he’s keen to expand into more land-based deals, after having arranged a string of marine conservation swaps.
Meanwhile, the list of countries expressing interest in debt-for-nature swaps is growing. Suriname and Sri Lanka are said to be exploring options.
And representatives of Gambia, Colombia, Pakistan, Eswatini and Kenya have all expressed support for such financing arrangements.
“There’s obviously lots of opportunity,” said Rob Weary, an adviser on the Ecuador deal through his firm, Aqua Blue Investments. — Bloomberg
