February 7, 2020 / 11:10 AM / in 20 days

Breakingviews - Thiam exit only first on Credit Suisse to-do list

Tidjane Thiam, Chief Executive Officer of Credit Suisse, gestures as he speaks during a session at the 50th World Economic Forum (WEF) annual meeting in Davos, Switzerland, January 22, 2020.

LONDON (Reuters Breakingviews) - Credit Suisse has taken one big step towards redemption. The $32 billion lender on Friday parted ways with Chief Executive Tidjane Thiam, following an embarrassing spy scandal that tarnished its credibility with clients, staff and regulators. But there are other items that belong atop the Swiss bank’s to-do list, starting with finding a new chairman of the board.

Thiam’s position was untenable, even though he has denied any knowledge of the tailing of former wealth boss Iqbal Khan and another colleague. The surveillance was pinned on his long-time associate and chief operating officer, Pierre-Olivier Bouée. At best, Thiam’s professed ignorance of the affair was not reassuring. At worst, it was unconvincing.

The affair, which riveted a Swiss banking sector that prizes discretion above all else, outweighed the Ivorian’s successful transformation of Credit Suisse from a risky investment bank into a leading global wealth manager. Having fallen out with the chairman over the matter and losing the high-performing Khan to arch-rival UBS, it’s understandable that Thiam had little board support. 

But Urs Rohner, a key fixture of the Zurich establishment who has chaired the board for nine years, deserves some of the blame. He appointed Thiam, and therefore shares some responsibility for his troubles. It’s also unclear why Rohner and the board allowed Thiam to leave before Swiss financial supervisor Finma had completed an investigation prompted by the espionage saga. 

Rohner and the board also need to explain their choice of successor. Thomas Gottstein was only a few years ago fingered to lead a spinoff of the Swiss domestic business, which he has ably run. His resume is light in some of Credit Suisse’s most important growth areas, like U.S. investment banking and Asian private banking.

Crucially, Rohner has lost the confidence of big shareholders like David Herro of Chicago’s Harris Associates. Herro sent a letter to the board earlier this week warning against the removal of Thiam and questioning the chairman’s judgment during his long tenure. Credit Suisse’s annual general meeting is scheduled for late April. Rohner will struggle to make a convincing case that he should stay until his term expires in April 2021. 

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