Business & Investment

Credit Suisse looking for a new map after getting lost in Archegos By Reuters

© Reuters.File photo: Swiss bank Credit Suisse logo can be seen in Bern

By Brenna Hughes Neghaiwi and Oliver Hirt

Zurich (Reuters)-Thomas Gottstein this week Credit suisse (SIX :) Despite being CEO, investors may want more radical action after the bank’s $ 4.7 billion loss from the Arquegos hedge fund scandal.

Credit Suisse shares fell 25% in a month, and Switzerland’s second-largest bank is recovering from being exposed to the collapse of Greensill Capital first and then Archegos Capital Management.

As a result, 57-year-old Swiss citizen Gottstein faced the challenge of limiting long-term damage to the bank’s reputation and retaining both customers and staff.

“It’s very disappointing what happened in the last few months, far below expectations,” one of Credit Suisse’s debt investors told Reuters.

According to analysts and investors, Gottstein’s hands will be tied to the appointment of Antonio Horta-Osorio, known as AHO, as part of the staff at LON: in the UK, where analysts and investors will invest. The house said. felt.

Andreas Benditi, an analyst at Vontobel Bank, said of recent events: “The full consequences of a declining reputation will become apparent over time.”

Credit Suisse said Tuesday that it would need to charge CHF 4.4 billion ($ 4.71 billion) after Arquegos “failed to fulfill its margin promise.”

Nearly three times the profits of investment banks last year, the price scale far outweighs the loss of $ 2.3 billion of fraudulent traders at rival UBS in 2011.

Swiss banks are not afraid to dump the CEO if things don’t go as planned. A fraudulent trader incident triggered Oswald Grubel’s departure from UBS, and Gottstein’s predecessor, Tijan Tiam, was expelled in a spy scandal.

Gottstein, a former investment banker, wealth manager and just commander a year ago, responded quickly on behalf of investment bankers and bank risk managers.

This follows his announcement that Credit Suisse’s wealth management will be separated from the wealth business after being forced to close a $ 10 billion fund investing exclusively in bonds issued by Greensil. It was.

Waiting for AHO

Investors expect it to be difficult to make broader changes until two external inquiries to Arquegos and Greensill and the change of chairman are complete.

“This transition is a employment guarantee for Thomas Gottstein in the short term,” said a source familiar with the matter.

Urs Rohner, who has been in the bank since 2011, will leave Credit Suisse at the end of April and retail banking specialist Alter Osorio will be elected at the next annual shareholders meeting.

“We hope that the upcoming change of chairman at the next annual shareholders meeting will enable us to establish a new corporate culture that is more focused on risk management,” he said to shareholders. Said Etos, a company that advises on.

Etos requires two investigations to investigate the accountability of the board and publish the results.

The change of chairman caused problems for those seeking peace of mind during the turbulent times of banks.

“I’m not sure who to rely on,” said one senior adviser. “Gottstein has weakened, Loner has soon disappeared, and Alter Osorio hasn’t arrived yet. Everything is fluid, but leadership. Is needed. ” now”

Sources close to Credit Suisse said banks could have already undertaken significant structural changes without the planned change of chairman.

For the time being, Credit Suisse is scrutinizing broker prime service exposures, according to another source, and expects a more thorough review to mitigate risk within the unit and a wider range of investment banks. Will be done.

A more pressing concern is whether the client and some of its top employees will shift after a recent scandal.

A head hunter in Hong Kong said he had received several inquiries from employees of Credit Suisse’s market business who were about to leave following the Arquegos scandal.

The chairman of Monaco’s wealth management boutique said he saw a chance to seduce Credit Suisse’s top private bankers.

“It’s a great opportunity for people like us as boutiques and other competitors of Credit Suisse to gain more market share in the ultra-rich,” said Wealth Manager, who wasn’t named. I added.

Credit Suisse declined to comment on the potential loss of staff.

After Chin’s departure, investment banking Christian Meissner is tasked with retaining talent and winning business in areas where Credit Suisse is doing well. The Austrian banker said.

“People will not quit yet. They will need to find a new job first. This will give Meissner time to show that they are still competitive and able to win the mission,” sources said. Said.

Gottstein told the Swiss newspaper NZZ on Tuesday that he still believes in a “one-bank” model in which the departments work together to serve wealthy clients and “strengthen” risk management.

If he sticks to the model, he needs to pave the way for profitability while keeping risks much tighter.

“They lose money and can’t get it back until they find another way,” said Jason Teh, chief investment officer at Vertum Asset Management in Sydney.

($ 1 = 0.9336 Swiss francs)

Credit Suisse looking for a new map after getting lost in Archegos By Reuters Credit Suisse looking for a new map after getting lost in Archegos By Reuters

Back to top button