A Swiss Scandal

The ousting of Credit Suisse’s chief executive Tidjane Thiam marks the latest, and hopefully final, event in the surveillance scandal that has embroiled the Swiss bank. Preceded by a 20 hour board meeting, the decision was due to the scandal starting to “damage the company’s reputation”.

It began in September 2019 when it emerged that Credit Suisse was caught hiring a corporate espionage firm, Investigo, to tail a defector from Credit Suisse to rival UBS. Iqbal Khan was the man in question – an ambitious, former director at Credit Suisse. Hailed by some as a potential successor to Thiam, he reportedly became frustrated with his profile at Credit Suisse and, therefore, left for UBS. Whilst interviewing with other potential employers in Spring 2019 he discussed recruiting some of the top-performing members of his team (in line with his employment agreement with Credit Suisse) which appears to have irked the bank.

Credit Suisse’s Chief Operating Officer and Head of Security Pierre-Olivier Bouée was found to have ordered the surveillance and was eventually fired. As Thiam’s “right hand man”, suspicions arose over whether Thiam was aware of the surveillance, however, an independent investigation carried out by a law firm concluded Thiam had no knowledge of it. The situation was complicated by the relationship between Thiam and Khan; whilst they had initially had a good relationship, Khan’s purchase and subsequent construction work of the house next door to Thiam’s had soured the relationship and caused a domestic spat which culminated in at altercation at a Christmas party in 2018. This reportedly led to the pair barely being on speaking terms and a toxic atmosphere at the bank’s headquarters – the board expedited Khan’s departure from the bank.

The scandal deepened in December when it emerged Credit Suisse had also spied on its former head of human resources – causing the pressure on Thiam to increase. He has been criticised for a lack of contrition and an inability to grasp the magnitude of the scandal. Growing opposition from the board eventually orchestrated his ousting; a decision unpopular with many shareholders. Harris Associates, the largest shareholder in the bank, led a public campaign of support for Thiam and even threatened to oust or sue the Chairman of the board.

Known for doubling Prudential’s profits and tripling their share price in his time as CEO pre-Credit Suisse, Thiam’s performance at Credit Suisse has been less inspiring. Whilst he has guided the bank through the rockiest period in its history, including a $5.3bn settlement with the US Department of Justice and a strategy overhaul, the share-price has underperformed peers and earnings in the trading unit remain variable. Recognition must, however, be given for his role in increasing assets under management to a record $1.53tn and extensive cost cutting which is predicted to have substantial impacts on future profits.

Whether ousting Thiam was the correct decision is debatable, but at least it brings hope that this episode of Credit Suisse’s history is over. Ideally, the bank has learnt its lesson from the scandal and will avoid any form of surveillance in the future – the appointment of insider Thomas Gottstein (former head of domestic operations) is seen as a safe bet and is likely to calm turbulent waters. He will benefit from the foundations Thiam has built up and is likely to follow a similar strategy as Credit Suisse tries to make up for years of underperformance.


By James Float

Sector Leader: Tchilasa Kibona

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