The former Credit Suisse chief executive Brady Dougan and predecessor of Tidjane Thiam is reportedly planning to launch a merchant bank in the early part of 2017, according to a report in the Wall Street Journal. Dougan’s venture will be backed by Scepter Partners, a syndicate of wealthy Middle Eastern families and state investment funds.
The bank plans to make investments across a number of industries while providing investment-banking and trading services.
Although Dougan’s plan is still being fine-tuned, the concept is said to encompass a broader aspect than many of the ’boutique’ firms that other former senior Wall Street executives have opened.
Dougan is pursuing an alternative route and may use the funds provided by Scepter to trade with clients and potentially for its own account, as well as underwrite capital raisings. Added debt could give the new business billions of dollars more to put to work beyond Scepter’s $3 billion investment. The entity is expected to draw additional investors, including Dougan himself.
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Dougan, a former equities trader, commenced as Credit Suisse’s CEO just before the financial crisis. Under his tenure, the firm was commended for avoiding many of the major headaches encountered by other banks, but he left as the firm battled against poor performance.
At the new firm, Dougan is aiming to compete with Wall Street firms in core, capital-intensive businesses. He plans to use software and data available to break into parts of the finance industry dominated by big banks and broker firms and to bring new technology to investment banking.
While the new venture’s total capital is a fraction of the balance sheets held by big Wall Street firms, those banks are required by US regulators to hold extra capital cushions against their trades.
Outside the Federal Reserve’s oversight could mean that Dougan’s new venture will become more profitable or allow it to charge less for the same services than the bigger banks.