Wells Fargo Preps “Make-Whole” Loans for CS Alumni —Sources
Brokers recruited to Wells Fargo Advisors from Credit Suisse’s defunct U.S. brokerage business in 2015 and 2016 are learning more about an aborted promise to feed them the Swiss bank’s new-issue equity allocations, and they are not happy about it.
Wells had negotiated five-year, near exclusive access to Credit Suisse’s IPO and secondary equity offerings as an incentive to lure the CS brokers in 2015 and 2016. Retail allocations of the lucrative deals were to be split among their cohort of 100-odd advisors and a small number of brokers at Fidelity Investments, they had been told
As reported two weeks ago, however, red-faced branch managers have been telling the Credit Suisse recruits that allocations of the lucrative deals will substantially decrease because the Swiss bank is adding at least three other broker-dealers to the retail syndicate.
In updates over the last few days, brokers have learned that unknown to them Credit Suisse always had the right to rescind the arrangement by giving six months’ notice to Wells.
Though they wouldn’t speak for the record, several across the U.S. said they were furious at the modified bait-and-switch, and are even more upset that Wells executives waited three months before telling them that the syndicate escape clause had been exercised by Credit Suisse.
In an attempt to soothe affected advisors, Wells plans to offer forgivable loans to Credit Suisse alumni in amounts that track the revenue they had made from selling the syndicate deals, according to sources. Details are still being worked out, they have been told.
A Wells Fargo spokeswoman was not able to immediately respond to requests for comment about the change or about some brokers’ assertions that Wells Advisors’ capital markets trading head Craig Noble was responsible for the Credit Suisse arrangement.
Approximately 110 former Credit Suisse brokers moved to Wells Fargo Advisors, the firm that the Swiss bank picked as its favored partner after announcing in the fall of 2015 that it was shuttering what it called its U.S. private banking businesses.
Since then, the special cadre of brokers have had access to about 215 Credit Suisse transactions, one broker said. Another noted that the deals were not all rocketships to the moon, citing at least one oil-and-gas partnership that went quickly south and irritated some of his clients.
Syndicate deals are generally viewed as an easy sell, however, since they are executed in a matter of hours after an offering, priced without discounting discussions,and marketed as exclusives that are not available at many rivals.