Credit Suisse replaces CEO, posts $2.3 billion loss in fresh blow to recovery

In recent months, some investors had called for current CEO Thomas Gottstein to be replaced, but the bank resisted. PHOTO: REUTERS

ZURICH (REUTERS, BLOOMBERG) - Credit Suisse has named asset management expert Ulrich Koerner as its new chief executive, the latest sign of churn at the Swiss bank that on Wednesday (July 27) announced a strategic review as it struggles to recover from a series of scandals.

Pressure had been mounting on current chief executive Thomas Gottstein for months over the scandals and losses racked up during his two-year tenure that have hammered shares and angered investors.

News of a strategic review that will further curb its investment banking operations came as Credit Suisse posted a 1.59 billion Swiss franc (S$2.3 billion) second-quarter loss, badly missing market expectations.

It was driven by a loss at the investment bank and trading businesses, and higher litigation expenses. The bank saw net outflows of 7.7 billion francs as clients traded less and cut risk in response to gyrating stock markets. 

Analysts had expected a net loss of 206 million francs, according to a consensus of 19 estimates compiled by the lender.

Swiss rival UBS on Tuesday posted a US$2.1 billion (S$2.9 billion) second-quarter profit, smaller than expected as turmoil in financial markets hurt its investment banking and wealth management businesses.

Credit Suisse had described 2022 as a “transition” year in which it is trying to turn the page on costly scandals that prompted a near-total reshuffle of top management. In June, executives said Credit Suisse may “temper” some of its key growth initiatives in wealth management as it focuses on a risk turnaround and bolstering technology.

When Mr Gottstein took the helm in 2020, he promised a “clean slate” for the bank, which was recovering from an internal spying scandal that cost his predecessor Tidjane Thiam his job.

Since Mr Thiam left in February 2020, the stock has been down nearly 60 per cent and troubles at the bank have only escalated.

In 2021, the bank disclosed a US$5.5 billion loss from the unravelling of United States investment firm Archegos and the collapse of US$10 billion worth of supply chain finance funds. The events prompted management ousters, investigations and a capital increase - followed by further losses and fresh legal cases.

Credit Suisse brought in Mr Koerner in April 2021 to lead its newly separated asset management division following the collapse of the US$10 billion worth of supply chain finance funds linked to insolvent financier Greensill Capital.

Mr Koerner returned to Credit Suisse from arch-rival UBS, where he most recently served as adviser to the CEO from 2019 to 2020. He ran UBS Asset Management from 2014 to 2019. Mr Koerner was previously a senior executive at Credit Suisse Financial Services and ran the Swiss business.

Mr Koerner, who used to work for consulting firm McKinsey, is considered a restructuring expert in Switzerland.

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