For the second time in just over a week, Thomas Gottstein faced a tough crowd: his own bankers.
The CEO of Credit Suisse Group AG brought together dozens of CEOs at the global bank in a conference call Tuesday afternoon as part of crisis management efforts after the lender announced it would lose up to $ 4.7 billion amid the fund’s fall coverage Capital Management Archives.
According to people familiar with the call, Gottstein was assaulted by the bank’s exposure and risk profile, and why it lost so much more than rivals in the debacle. Gottstein has not yet been able to give detailed answers and instead pointed to the arrival of new President Antonio Horta-Osorio later this month as an opportunity to revalue his strategy, according to people.
Read more: Credit Suisse Girds for Billions of Losses from Archegos Hit
The 57-year-old Swiss CEO faces demands for answers from his board of directors and star traders, distributors and private bankers facing a double whammy. Shares that have just been awarded for last year’s efforts are already falling by around 20% and first-quarter earnings have been erased by Archegos ’massive success, meaning 2021 may not to produce richer rewards.
A bank spokesman declined to comment on the call.
This causes Gottstein, who has promised a “clean slate” after the scandals of his predecessor, to be stranded between disgruntled staff and their own bosses who are increasingly taking over. It was the board of directors who made the decision to replace risk general manager Lara Warner and head of investment bank Brian Chin, not Gottstein, according to another person familiar with the matter. The board is pushing for a review of the bank’s broader strategy, not just of the units that have had problems, people said.
Photographer: Stefan Wermuth / Bloomberg
Decreasing value
The bank’s shares have fallen 12% so far this year, driven by the effect of Archegos ’losses and the still unknown cost of cleaning up after the collapse of Greensill Capital. Credit Suisse is the only major investment bank with a fall in its share price, as peers reap the benefits of continued market volatility amid the uncertain recovery from the global pandemic.
The share awards for 2020 were priced at around 13 Swiss francs per share, according to people with direct knowledge of the issue. Shares of Credit Suisse are currently trading at 10,085 francs.
Gottstein and senior bank management are already risking the spirits of customers who have been caught in the Greensill scandal. The lender is opting to allow investors to pay the bill for any loss of funds the bank ran with the company of former billionaire Lex Greensill, reversing previous advice that would compensate them, Bloomberg reported this week.
While many of the business decisions that led to the Greensill and Archegos explosions predate Gottstein’s time as CEO, he now remains in charge of a bank that is adrift until it is known. the full scale of losses and whether it was already asserted or changed.
Strategy review
Gottstein is trying to recover from a greater success than the crises that brought down some equality executives. In 2011, Oswald Gruebel resigned as CEO of UBS following a $ 2.3 billion loss for unauthorized transactions. Gottstein’s predecessor, Tidjane Thiam, left the bank in the wake of an espionage scandal that caused no direct financial success.
Now the question marks are based on the long-standing “one bank” strategy of cross-selling investment bank products, wealth management and asset management to the same set of clients. Another open question remains the future of the asset management unit, which Gottstein has suggested could be completely separate from the rest of the bank.
Then there are many things in Horta-Osorio, the 57-year-old chief executive of Lloyd’s Banking Group Plc, who will have to be chairman if shareholders vote for him on April 30th. With Horta-Osorio, Credit Suisse is taking advantage of a polyglot retail banking veteran who brings an outside perspective and international experience, and its own history of dealing controversy.
“Credit Suisse needs a radical change,” Kepler Cheuvreux analyst Nicolas Payen wrote in a note to clients, adding that banks need to change their risk framework and strategy. “In our view, the worst thing about Credit Suisse now would be the status quo with only cosmetic changes.”
– With the assistance of Ambereen Choudhury and Gillian Tan