NEW YORK -- Credit Suisse Asset Management, which has been hit recently with a few key departures of investment staff, is countering with plans for a major expansion of its analysts and a streamlining of its global investment operations.
The firm is looking to practically double the number of analysts to almost 50, said Larry Smith, global chief investment officer. It also will cut the overlap of its global investment staffs, particularly the teams that run European and U.K. equities. Existing staff may be moved to different positions, but no staff cuts are expected.
The firm, with $161.2 billion under management worldwide (excluding the assets of recently acquired Warburg Pincus Asset Management), has been in the throes of major changes since May, when Mr. Smith joined the firm as global CIO, leaving a similar post at J.P. Morgan Investment Management Inc.
"The role of global chief investment officer was created in an explicit attempt to put an emphasis on the global integration of our investment management operations," Mr. Smith said in an interview. "As such, I have the overall responsibility for the success and failure of our investment departments around the world."
William Sterling, managing director of international equities, left in late June, as did Stephen Waite, an international equity portfolio manager, and Ian Borsook, a quantitative analyst. Mr. Sterling later said he left for personal reasons and the desire "to do something entrepreneurial."
Fallout possible
Mr. Smith said "there could be some business fallout" from a few clients because of Mr. Sterling's departure. The firm and Mr. Sterling had tried to find "common ground" to keep him and his team in the company, Mr. Smith said. "Unfortunately, that was not achievable." No plans have been made to replace Mr. Sterling.
Another key departure this summer was Robert Moore, executive director for fixed-income. He left in June for CIGNA Investments and was later followed by a couple of associates.
Mr. Moore also will not be replaced, although Credit Suisse is "on the verge" of making a key addition to its fixed-income staff, Mr. Smith said.
He pointed to the rest of the staff's stability. Credit Suisse has seen no departures in its high-yield bond group and its emerging markets staff, he said. Only seven of 110 investment professionals in New York left, he added.
"We're confident we've stabilized the staff."
In fact, Mr. Sterling's departure might prove a plus for the firm because it was looking to consolidate its global investment operations. Prior to his leaving, Mr. Sterling co-chaired the firm's investment policy group and would have made top-down, macroeconomic decisions for global and international portfolios. Mr. Smith said there might be room in the future for a bottom-up, stock picker on the panel. And London and Zurich -- not New York -- will be the centers for the firm's U.K. and European investment decisions.
The firm's international equities approach clearly is evolving.
Overlap ending
He said there was "overlap" in investing, with European equities being run from New York, London and Zurich.
That will change. By next summer, the continental European equities portions of all its portfolios will be run from Zurich, he said.
Alan Zlatar, head of the European equity team in Zurich, is now in New York for six months to a year while his home base's information technology systems are upgraded.
Mr. Smith said plans to run from London all U.K. portions of portfolios also exist. Credit Suisse also is looking to hire a portfolio manager to run the U.K. equities.
As for analysts, the idea is to improve the quality of information that Credit Suisse Asset Management portfolio managers get. The analysts will be centered in New York, London and Japan, he said. Hirings should take up to a year.
U.S. consultants, meanwhile, were disappointed by the departures of Messrs. Sterling and Moore.
One consultant took the defections as a sign that the transition of BEA Associates in New York to an integrated part of the global Credit Suisse Asset Management had been bumpier than expected.
Credit Suisse bought 80% of BEA in 1990 and the rest in 1995. It changed its name to Credit Suisse Asset Management at the start of this year.
Proving itself
Credit Suisse needs to prove itself again in international and domestic fixed income, one consultant said.
At least one Credit Suisse client -- the $1.3 billion Oklahoma Firefighters' Pension & Retirement System, Oklahoma City -- has decided to search for a new international equity manager since Mr. Sterling's departure. But the two events are not related, said Ginger Poplin, controller.
The system will issue a request for proposals at the end of August for an active international equity manager to run an EAFE-style portfolio. Credit Suisse runs $80 million for the pension fund. She said the firm was welcome to rebid; the search was part of the fund's normal course of business.
Mr. Sterling leaving Credit Suisse caused executives at Oklahoma Firefighters "to express concern," she said. "But you can't get rid of someone for a little bit of concern. We don't feel strong enough to fire (Credit Suisse) but are going out to bid as normal."
Credit Suisse ran $57.3 billion in assets from its New York offices as of June 30.
