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Michel Degen is tall and stocky. Solid as a rock in financial seas. The Basel native with the sonorous voice and quick phrases went from the little banker to the great boss of Credit Suisse Asset Management.
A pearl that has brought the CS Group impressive profits for years. Everything is different from yesterday. Degen was on leave along with other managers.
The career of a picture book ends in ruins. How was that possible?
Degen was the kind of banker CS loves. No politician, no kind of powerpoint. But a doer.
He created funds that moved: real estate, electricity, convertible bonds, alternative investments. Some failed, many acted.
Degen was the star. He gathered a troop of ambitious comrades around him. Submissive, my critic. Loyal, says Degen.
The Degen team transformed CS Asset Management in Switzerland into a kingdom. No one except Degen and his men had anything to report there.
With me, or out, that’s the motto.
It was good for a long time. Until David Solo knocked on the door.
The American, who made hundreds of millions in Switzerland because Swiss like Marcel Ospel and Raymond Bär crawled on him, was on the mat in Degen about 5 years ago.
At that time he had just left GAM and was now active with Alexander “Lex” Greensill. He just became a major contributor and investor in the wunderkind Down Under.
It only brought together Degen and Greensill. Together they made a plan.
That meant: Degen would advertise so-called supply chain funds to CS clients, which Greensill would fill with content and assets.
Degen was fire and flame. By pre-financing vendor invoices, you would help CS clients invest their useless cash in a sure cause.
The construct climbed the ladder. For Iqbal Khan.
He was Degen’s boss at the time. Credit Suisse’s shooting star has had full responsibility for CS’s international wealth management since 2015.
This also included asset management. Khan discussed the idea of Solo, Greensill and Degen and approved the fund.
An insider said today that this was the decisive mistake.
“As a bank that focuses on private banking, it should never, ever do that,” said the insider. “It was clear that these funds would explode.”
Khan left Degen and Solo alone and took care of other things. Even when the funds really did accelerate for the first time, Khan did not intervene.
Only in 2018 and 2019, when GAM suffered a major loss with a Greensill partner, Khan, Degen, and his American Eric Varvel, who has now been appointed head of global asset management, did they review the books.
They found that there were no real parallels between the GAM fund, which had gotten under the wheels, and the CS supply chain vehicle.
Continue as before, was the command. Then Khan disembarked in mid-2019, a little later he was hired as co-director of global wealth management at archrival UBS.
Degen and his boss Varvel got a new superior, Philipp Wehle. He had inherited some construction sites from Khan.
Asset management, on the other hand, seemed to be running smoothly. Then Wehle also said: We can move on.
Degen saw himself as the winner. He was on good terms with Thomas Gottstein, who took over operational control at the group level in February 2020.
Degen felt safe. An untouchable.
It crashed out of nowhere.
In the spring of 2020, the Financial Times reported on an interlocking triangular relationship between CS-Fonds, Greensill, and SoftBank.
Gottstein was startled. What’s up The new CEO put Degen’s asset management to the test.
Not much was found. The SoftBank thing looked ugly, so we broke up.
Otherwise, Gottstein also said: everything is in balance.
Does Degen still cool slowly? In any case, decisions were made indicating that cracks were opening in the realm of the king of asset management.
A close colleague of Degens jumped in with his own company and received all of Degen’s infrastructure assets as a dowry, including the Swiss dams.
Then Degen took under his protection the costumes of an old friend, whose children he is the goddess. We are talking about Aganola, which the friend was allowed to earn a lot of money from CS clients and then sell it risk free to Degens Asset Management.
An alternate vehicle joint with David Solo was quietly scrapped. Apparently getting away with it quickly.
There was some panic in the maneuvers. But on the surface everything remained calm.
Until 10 days ago. Then everything fell apart. A judge from far away Australia left Greensill hanging. He didn’t want to condemn rogue insurers for their supply chain funds to further protect vehicles.
It was the end of Greensill, Solo and Degen. The execution continued yesterday: The CS left the swords on license.
The news travelled all round the world. The Swiss, who nearly made it to the world league like no other in the competitive asset management world, landed hard on the ground.
Many felt that his boss, Eric Varvel, kicked him off the CS farm as a typical CS. The American, who has hardly been seen in the dirt lately, hides behind Degen, the Swiss.
He knew of his dead man walking for a long time. But that he alone should pay the bill for failure is something to talk about. What about Varvel? What about Lara Warner, Chief Risk Officer? What about CEO Thomas Gottstein? And Khan?
