Credit Suisse faces more upheaval after chairman’s sudden exit
By Anshuman Daga and Oliver Hirt
SINGAPORE/ZURICH (Reuters) – Credit Suisse will stick to its strategic overhaul despite the abrupt departure of its mastermind Antonio Horta-Osorio following an internal probe into his personal conduct, including breaches of COVID-19 rules, the bank’s new chairman said on Monday.
Horta-Osorio leaves less than nine months after he joined the bank to help it deal with the implosion of investment firm Archegos and the insolvency of British supply chain finance company Greensill Capital, while it was still reeling from the 2020 exit of CEO Tidjane Thiam over a spying scandal.
The Portuguese banker unveiled a new strategy for Switzerland’s no. 2 bank in November to focus on wealth management, rein in its investment bankers and curb a freewheeling culture.
“In the years ahead the strategy will be reviewed regularly, but at the moment it’s not an issue at all,” Axel Lehmann, the Credit Suisse board member picked to replace Horta-Osorio, told Reuters in an interview, his first with the media since his appointment.
The bank’s shares were down around 1.6% in early afternoon trade.
Horta-Osorio’s personal conduct has recently come under scrutiny, after he breached COVID-19 quarantine rules twice in 2021 – an embarrassment for the former Lloyds chief executive who has said every banker needed to be a risk manager.
“I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally,” the Portuguese banker said in a statement issued https://bit.ly/3fC7Flb by Credit Suisse on Monday.
“I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time,” he said.
Credit Suisse said Lehmann had taken over with immediate effect. It gave no details on an investigation commissioned by its board.
Two people familiar with the situation said that besides COVID-19 breaches the probe also looked into Horta-Osorio’s use of company private jets, citing an instance when he has directed one to take him to the Maldives on his return from a business trip in Asia.
A spokesperson for Horta-Osorio said he was not speaking to the media.
His exit marks a professional low point for the banker who spent a decade at Lloyds rebuilding the lender following its bailout during the 2008 financial crisis. Last summer he was awarded a knighthood in Britain for his contribution to financial services and mental health, winning praise for speaking publicly about the stress he experienced after taking over at Lloyds.
Lehmann, a Swiss citizen who previously worked for rival UBS and spent nearly two decades at Zurich Insurance Group, said no change of course was planned for Credit Suisse as it tries to steer its way back into calmer waters.
He said business remained excellent despite the latest upheaval and that no big management changes were in the works, adding that Chief Executive Thomas Gottstein was “central to our ability to continue the transformation together”.
The board concluded that it was time for Horta-Osorio to go, he said.
“We determined over the weekend – and he also thought about it – that it’s just in the best interest for him but certainly for the bank as well to put this story behind us and he resign.”
Analysts said Horta-Osorio’s departure was inevitable after it was found he had breached COVID-19 rules twice, but it could further complicate the bank’s turnaround.
“His departure leaves Credit Suisse with a lack of strong characters at the top and leadership questions will likely be raised,” wrote analysts at Citigroup.
In December, Reuters reported that a preliminary internal bank investigation had found that Horta-Osorio attended the Wimbledon tennis finals in London in July without following Britain’s quarantine rules.
Horta-Osorio also broke Swiss COVID-19 rules in November by leaving the country during a 10-day quarantine period, the bank said last month.
The pandemic brought greater scrutiny of prominent figures, with athletes such as tennis superstar Novak Djokovic or politicians like British Prime Minister Boris Johnson drawing heat for their actions at a time when the public has to live with COVID-19 curbs.
Investors had been hoping the bank’s strategic changes would help lift the ailing Swiss bank’s share price.
David Herro, portfolio manager at Harris Associates, Credit Suisse’s third-biggest shareholder, told Reuters before Horta-Osorio’s departure he believed the infractions were “minor” and that he and his turnaround plan had the institution’s full backing.
“So, that’s a very important reason to invest in the company. And if that person (Horta-Osorio) leaves, that very important reason leaves”.
‘WHAT A WASTE’
Reeling from a disastrous year, Credit Suisse reported a 21% fall in its third-quarter profit last year and warned of a loss for the final three months of 2021.
UBS, Switzerland’s largest bank, however reported its highest quarterly profit in six years in the third quarter and while Credit Suisse shares have shed 23% over the past year, its rival’s have soared 33% to a four-year high.
Horta-Osorio’s sudden exit demoralised staff at Credit Suisse, with some questioning what was next for the bank.
“What a waste and again we make the headlines for the wrong reason,” a senior Credit Suisse private banker said on condition of anonymity as he was not allowed to speak to media.
“In between we froze for one year waiting for the new strategy from the new man,” he said.
(Editing by Tomasz Janowski)