Summary
- Chairman Antonio Horta-Osorio apologizes for personal actions
- Quits within one year after taking charge
- Bank appoints former UBS executive Axel Lehmann as chairman
- Lehmann says the bank’s strategy is not under discussion
- Credit Suisse announced a big revamp in November
The bank’s new chairman said on January 17 that despite the abrupt departure of its mastermind Antonio Horta-Osorio following an internal probe into his conduct, including breaches of COVID-19 rules, Credit Suisse will stick to its strategic overhaul.
While the bank was still reeling from the 2021 exit of CEO Tidjane Thiam over a spying scandal, 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.
A new strategy to focus on wealth management, rein in its investment bankers, and curb a freewheeling culture was unveiled by the Portuguese banker for Switzerland’s number 2 bank in November.
In his first interview with the media since his appointment, Axel Lehmann, the Credit Suisse board member picked to replace Horta-Osorio, told reporters:
“In the years ahead the strategy will be reviewed regularly, but at the moment it’s not an issue at all.”
In early afternoon trade, the bank’s shares were down around 1.6%.
After Horta-Osorio breached COVID-19 quarantine rules twice in 2021 – an embarrassment for the former Lloyds chief executive (LLOY.L) who has said every banker needed to be a risk manager – his conduct has recently come under scrutiny.
In a statement issued by Credit Suisse on Monday, the Portuguese banker said:
“I regret that a number of my actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally. I, therefore, believe that my resignation is in the interest of the bank and its stakeholders at this crucial time.”
Lehmann had taken over with immediate effect, as confirmed by Credit Suisse. No details were given by the bank on the investigation commissioned by its board.
Citing an instance when he has directed one to take him to the Maldives on his return from a business trip in Asia, Horta-Osorio’s use of company private jets was also looked into during the probe alongside COVID-19 breaches, two people familiar with the situation said.
Horta-Osorio’s spokesperson said he was not speaking to the media.
Having spent a decade at Lloyds rebuilding the lender following its bailout during the 2008 financial crisis, his exit marks a professional low point for the banker. For his contribution to financial services and mental health, he was awarded a knighthood in Britain last summer, winning praise for speaking publicly about the stress he experienced after taking over at Lloyds.
As Credit Suisse tries to steer its way back into calmer waters, Lehmann, a Swiss citizen who previously worked for rival UBS (UBSG.S) and spent nearly two decades at Zurich Insurance Group (ZURN.S), said no change, of course, was planned for it.
Despite the latest upheaval, he said business remained excellent 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 decided that it was time for Horta-Osorio to go, he mentioned:
“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.”
Two Strikes
After Horta-Osorio was proven to have breached COVID-19 rules twice, his departure was inevitable. However, it could further complicate the bank’s turnaround, analysts said.
Analysts at Citigroup wrote:
“His departure leaves Credit Suisse with a lack of strong characters at the top and leadership questions will likely be raised.”
According to a preliminary internal bank investigation, Horta-Osorio attended the Wimbledon tennis finals in London in July without following Britain’s quarantine rules.
By leaving the country during a 10-day quarantine period, Horta-Osorio also broke Swiss COVID-19 rules in November, the bank said last month.
Greater scrutiny of prominent figures is ongoingly caused by the pandemic 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 that the ailing Swiss bank’s share price would be lifted with the help of the bank’s strategic changes.
Before Horta-Osorio’s departure, David Herro, portfolio manager at Harris Associates, Credit Suisse’s third-biggest shareholder, told Reuters that 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’
Also warning of a loss for the final three months of 2021, Credit Suisse, reeling from a disastrous year, reported a 21% fall in its third-quarter profit last year.
While over the past year Credit Suisse shares have shed 23%, its rivals’ have soared 33% to a four-year high. But, UBS, Switzerland’s largest bank, reported its highest quarterly profit in six years in the third quarter.
Staff at Credit Suisse was demoralized by the sudden exit of Horta-Osorio, with some analysts questioning what was next for the bank.
As he was not allowed to speak to media, a senior Credit Suisse private banker said on condition of anonymity:
“What a waste and again we make the headlines for the wrong reason. In between, we froze for one year waiting for the new strategy from the new man.”
