Credit Suisse weighs removing CEO Gottstein as soon as this year

Some board members are increasingly worried that CEO Thomas Gottstein is not getting a handle on the bank's problems. PHOTO: THE BUSINESS TIMES

SINGAPORE (BLOOMBERG) - Credit Suisse Group AG's board has held early stage talks on potentially replacing chief executive Thomas Gottstein after a string of scandals and misfires, sources with knowledge of the matter said.

A change at the top of the bank could come as early as this year, the sources said, asking not to be identified as the deliberations are private.

While the board continues to publicly voice support for Dr Gottstein, some members are increasingly worried that he is not getting a handle on the bank's problems, the sources said.

One year on from the collapse of Archegos Capital Management, which saddled Credit Suisse with about US$5.5 billion (S$7.65 billion) of losses, the bank is struggling to move past a series of profit warnings and hits that have eroded investor confidence, weakened key businesses and prompted an exodus of talent.

While the CEO inherited a number of legacy issues, detractors say his team should have better managed the Archegos risks and taken more heed of warning signs in its relationship with insolvent British finance firm Greensill.

"We don't comment on rumours and speculation," Credit Suisse said in a statement. "The chairman clearly endorsed Thomas Gottstein. Nothing has changed in this regard."

Since the Archegos blow, which led to the departure of investment bank head Brian Chin and risk chief Lara Warner, the bad news has continued apace.

The bank ousted reform-minded chairman Antonio Horta-Osorio after he broke Covid-19 rules and in recent quarters announced a string of surprise charges, including 703 million francs (S$976.4 million) of legal expenses in the first quarter.

Steadily, the ranks of the management board that Dr Gottstein inherited have been replaced after the successive hits, leaving the Swiss banker as the last one standing after two straight years of tumult.

In a recent interview in newspaper Neue Zuercher Zeitung, chairman Axel Lehmann gave his backing to Dr Gottstein, saying that the banker's institutional knowledge is needed to ensure a minimum of continuity.

Dr Lehmann said Dr Gottstein has probably the most difficult job in the industry and he is supporting him "because he's good".

The bank tapped Dr Gottstein, 58 and a two-decade veteran, to restore confidence after the shock departure of Mr Tidjane Thiam in February 2020 following a spying scandal.

Dr Gottstein was the first Swiss-born CEO of the bank in almost two decades and took on the dual challenge of putting a stop to infighting and boosting a share price that lost almost half its value during Mr Thiam's tenure.

It has since about halved again under Dr Gottstein.

Dr Gottstein was seen at the time of his surprise elevation as an attempt by the bank to install one of its own at the top to end an embarrassing run of tabloid stories on the spying scandal and return the bank to stability.

While having investment banking expertise and success running the bank's highly profitable Swiss business, he lacked the international profile and experience of some of his predecessors.

Credit Suisse named Dr Lehmann as chairman after he was appointed in January this year as an emergency replacement for Mr Horta-Osorio.

The bank announced its most recent management shuffle alongside first quarter earnings last month.

Longstanding chief financial officer David Mathers is leaving the bank once a replacement has been found, while Mr Helman Sitohang is stepping down as head of the Asia-Pacific region and becoming a senior adviser to the CEO.

The firm's top lawyer Romeo Cerutti is also leaving the firm.

At the same time, the bank appointed former Bank of Ireland CEO Frances McDonagh as the head of Europe, the Middle East and Africa and former UBS Group AG top lawyer Markus Diethelm as general counsel.

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