Tidjane Thiam. Picture: REUTERS/ARND WIEGMANN
Tidjane Thiam. Picture: REUTERS/ARND WIEGMANN

Zurich — Credit Suisse Group said CEO Tidjane Thiam is resigning, a stunning reversal for the executive who was backed by key shareholders after a damaging spying scandal.

Thiam will be replaced by Thomas Gottstein, a 20-year veteran of the bank who leads the Swiss unit. The bank also said chair Urs Rohner has the board’s “unanimous” backing to complete his term until April 2021.

Thiam will step down after presenting the Zurich-based bank’s fourth-quarter and full-year results next week, the lender said in a statement on Friday.

The decision is the culmination of a conflict between the CEO and Rohner that escalated after a recent spying scandal dented the bank’s reputation and prompted difficult questions about the culture at the top of the firm. While Thiam was cleared in an internal probe and a close lieutenant of his took the fall, the bank has struggled to move beyond the scandal after more cases surfaced.

Top shareholders, including Harris Associates, Silchester International Investors and Eminence Capital, had warned the board of directors ahead of this week’s meeting that they shouldn’t take action against the CEO. Instead, they urged Rohner to back Thiam or step down himself, in an unusual public display of support for the CEO.

“Tidjane has made an enormous contribution to Credit Suisse since he joined us in 2015. It is to his credit that Credit Suisse is standing on a very solid foundation and has returned successfully to profit,” Rohner said in the statement.

For Thiam, who was born in Africa and previously held top roles at Aviva and Prudential, the departure blemishes a largely successful four years at Credit Suisse, which he pivoted away from volatile trading and towards the more stable business of catering to affluent clients. While the shares lost about half their value during his tenure, he won shareholder support for stabilising the franchise by scaling back trading and bolstering wealth management.

Thiam’s troubles

The troubles started in September when it emerged that the bank spied on star banker Iqbal Khan after he announced he was joining crosstown rival UBS Group. The details that emerged in the wake of the scandal, including a personal falling-out between the two executives earlier that year and the suicide of a contractor, rattled business circles in Zurich, which normally enjoys a reputation for quiet professionalism.

An internal probe by the bank concluded that Thiam didn’t know about the spying, and that COO Pierre-Olivier Bouée was responsible. Bouée was fired late last year. It soon emerged that HR chief Peter Goerke was also followed, which the bank also blamed on Bouée.

The spying scandal underscores the risk of reputational damage to companies if their top executives are seen as running afoul of ethical standards

“I had no knowledge of the observation of two former colleagues,” Thiam said in the statement. “It undoubtedly disturbed Credit Suisse and caused anxiety and hurt. I regret that this happened and it should never have taken place.”

Gottstein is CEO of Credit Suisse Switzerland and has been in the banking industry for 30 years, including more than 20 at Credit Suisse. His experience includes 13 years spent in investment banking in London, as well as in private banking.

A third case, involving a former Credit Suisse employee in the US who claims she was spied on a couple of years before, was also probed and rejected by the bank. However, lawyers for Credit Suisse still looked into the matter as recently as last week, Bloomberg reported on Tuesday.

The spying scandal underscores the risk of reputational damage to companies if their top executives are seen as running afoul of ethical standards. Barclays CEO Jes Staley just survived a year-long regulatory probe into his attempts to unmask a whistle-blower, escaping with a fine in 2018. The British lender reprimanded Staley after discovering he had twice tried to identify a whistle-blower who had raised concerns about his recruitment of a former colleague.

Turnaround plan

Thiam took over at Credit Suisse in mid-2015 and quickly outlined a plan to slash costs, boost profitability and increase his firm’s financial strength. A former politician and insurance executive, he had no direct experience in investment banking, a business that became one of his biggest headaches at the bank. He was blindsided by losses at the credit unit in 2016, pushing him to accelerate cost cuts.

While the cost reductions were successful, the bank initially saw revenue fall under his watch, and the CEO had to tap investors for fresh capital to finance his turnaround plan. The measures started to pay off last year as earnings bucked the gloom facing other European banks and wealthy clients added new money, but by December, Thiam had to cut a profitability target and warned of a loss at the investment banking and capital markets business.

Born in Ivory Coast, raised in Morocco and educated in France at the elite École Polytechnique, the francophone Thiam has spent a lifetime defying the odds. By his mid-20s, he was working in Paris for McKinsey, the high temple of consulting. By his mid-30s, he was back in Ivory Coast — and under house arrest following a military coup. By his late-40s, he was in Britain, as the first black executive of a FTSE-100 company.


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