Corporate spying leads to regime change at a major European bank.
Months of rising internal tensions at Credit Suisse over a corporate spying scandal, and the role played by CEO Tidjane Thiam, culminated in early February in a marathon board meeting that lasted until 4 a.m. Thiam, the first black chief executive of a major European bank, agreed to walk. If the upheaval was a victory for anyone, it was the bank’s chairman, Urs Rohner.
The 60-year-old Swiss lawyer-turned-banker led a coalition of conservative local business leaders and politicians who actively lobbied against Thiam’s remaining CEO. The battle, which was waged in public through the frequent leaks to the Swiss press, was precipitated by complaints from former wealth management head Iqbal Khan, who had left Credit Suisse to join UBS after quarrelling with Thiam. Khan said private investigators were following him to determine whether he was poaching his Credit Suisse clients.
Strongly opposing Thiam’s departure were some of Credit Suisse’s largest shareholders, including Harris Associates, which holds 8.4% of the stock. The company praised the CEO’s success in turning around the Swiss lender, instead blaming Rohner for the debacle. Charges of xenophobia and racism have been levelled against the bank, and Harris has publicly threatened to lead a shareholder revolt against the chair.
Describing Rohner as “an incapable chairman,” Harris Vice-Chairman David Herro added that “to his already poor track record you can add removing a successful CEO.” While Rohner is due to retire next year, that isn’t soon enough for Herro and other activist shareholders.
Rohner counters that he only did what was necessary and that he has the board’s full support. “We saw a deterioration in terms of trust, reputation and credibility among all our stakeholders,” he said in a recent interview, adding that the damage was particularly felt in Switzerland, which generates about 40% of the lender’s total pre-tax income.
The board’s appointment of Thomas Gottstein as Credit Suisse’s new CEO may help to resolve the feud. Previously head of domestic banking, he is the first Swiss national to hold the top job in nearly 20 years. Considered a safe hand, Gottstein will need to cauterize the internal divisions within Credit Suisse while at the same time assuring investors that the bank remains committed to his predecessor’s recovery plan.
He also needs to restore the Swiss lender’s reputation for probity and discretion among its wealthy international client base. Whether Rohner’s continuing as chair until 2021 will be a help or a hindrance to his efforts remains to be seen.