Winds of change at Credit Suisse under new CEO

Mr Tidjane Thiam, the new CEO at Credit Suisse, has told staff he would seek advice from them on how the bank can be more agile while operating to the highest ethical standards.
Mr Tidjane Thiam, the new CEO at Credit Suisse, has told staff he would seek advice from them on how the bank can be more agile while operating to the highest ethical standards.PHOTO: BLOOMBERG

He plans to create strongly capitalised business while making the bank more nimble

ZURICH/BRUSSELS • Mr Tidjane Thiam, on his debut as chief executive officer of Credit Suisse Group yesterday, said he plans to create a strongly capitalised business while making the bank more nimble.

In a memo to staff on his first day on the job, the former Prudential CEO said he would take a few months to understand the group and operations before setting out his plans for Switzerland's second- biggest bank later this year.

"We must be ruthlessly selective about what we do and, just as importantly, what we don't do," Mr Thiam, 52, said in the memo.

"Choosing where we invest our capital and where we don't will be an area of clear focus for me in the coming weeks and months."

Investors are optimistic Mr Thiam can bring about a major change of strategy at the bank, though many also expect him to tap the market for cash.

PATROLLING THE PERIMETERS

We must be ruthlessly selective about what we do and, just as importantly, what we don't do.

MR TIDJANE THIAM, chief executive officer of Credit Suisse Group, in a memo to staff on his first day on the job.

Credit Suisse turned to Mr Thiam, a French Ivorian, to replace Mr Brady Dougan as investors sought a fresh strategy that may see the organisation trim the securities unit to focus on wealth management.

Mr Thiam, who has not led a bank before, will need to address a capital gap that according to some analysts could be as much as 13 billion Swiss francs (S$18.7 billion).

Shares in Credit Suisse rose as much as 3.8 per cent at one point in Zurich yesterday. The bank's shares are up 5.7 per cent since the start of the year, lagging UBS Group's 18 per cent advance.

The bank's "track record on capital allocation and costs has held back the shares materially", analysts at Morgan Stanley led by Mr Huw Van Steenis said in a note .

"Simply put, Credit Suisse has well over half of its capital allocated to its lowest returning unit - its investment bank." Mr Thiam "is likely to drive value through hard- nosed restructuring", they wrote.

Mr Thiam takes over from Mr Dougan a year after the bank paid a US$2.6 billion (S$3.5 billion) fine to the US authorities for helping Americans evade taxes. He told staff he would seek advice from them on how the bank can be faster and more agile while operating to the highest ethical standards.

"We will need a strong balance sheet that allows us to withstand adversity," he said. "We must have a capital generative business model and be strongly capitalised."

Mr Thiam's background in consulting and insurance sets him apart from his predecessor, who rose through the ranks of the investment bank. His experience in Asia, an important growth market for Credit Suisse's wealth management business, may also lead the firm to expand in the region, analysts said.

BLOOMBERG, REUTERS

A version of this article appeared in the print edition of The Straits Times on July 02, 2015, with the headline 'Winds of change at Credit Suisse under new CEO'. Print Edition | Subscribe