Credit Suisse Power Struggle Erupts Before Board Meeting
Signage is displayed at the Credit Suisse Group AG headquarters in New York, U.S. (Photographer: Jeenah Moon/Bloomberg)

Credit Suisse Power Struggle Erupts Before Board Meeting

(Bloomberg) -- A power struggle atop Credit Suisse Group AG is coming to a head.

As the board prepares to meet next week, tensions are mounting between Credit Suisse Chairman Urs Rohner and Chief Executive Officer Tidjane Thiam in the wake of an embarrassing scandal that triggered a regulatory probe into the bank’s culture and management.

Rohner is preparing a list of possible successors to Thiam, according to people familiar with the matter. At the same time, Thiam’s allies have urged Rohner to depart on schedule next year when his term as chairman ends, the people said.

David Herro, deputy chairman at Harris Associates -- one of Credit Suisse’s top investors -- said in an email that he wants Thiam to stay and that the board will be seeking a replacement for Rohner in 2021 “as per best practice.”

Credit Suisse Power Struggle Erupts Before Board Meeting

The drama reflects the aftershocks of an episode that rocked the bank last year when it emerged that a top Thiam lieutenant hired spies to track former wealth management head Iqbal Khan. While Credit Suisse called the incident an isolated event, it turned out that the aide, Pierre-Olivier Bouee, also ordered surveillance of former human resources head Peter Goerke.

“The story has no factual basis and is rejected by Credit Suisse,” according to a statement attributed to Rohner. The Zurich-based bank declined to comment.

Credit Suisse shares fell after the report, sliding to 1.7% to 12.22 francs in Zurich trading, the lowest lowest since Nov. 1.

An investigation by Swiss law firm Homburger concluded Bouee acted alone, clearing Thiam and prompting Rohner to issue a public apology for the spying, testing a long-standing partnership between the chairman and his CEO. The revelations that followed about the culture at Credit Suisse are adding up -- from outbursts by senior managers in Zurich to further disclosures about Thiam’s rift with Khan. Now Bouee is reported by Swiss media to be exploring legal options after being terminated for cause and therefore losing about $4 million in bonuses.

Credit Suisse Power Struggle Erupts Before Board Meeting

Thiam, who was hired by Rohner in 2015, has won shareholder support for stabilizing the franchise by scaling back trading and bolstering wealth management. But while costs have been slashed and the balance sheet strengthened, Credit Suisse stock has lost almost half its value since he took over.

Rohner is working on a plan to replace Thiam, according to a person familiar with his thinking. Emergency and mid-term succession planning for Thiam is in place, though, and no imminent change is expected, according to a another person. As for the chairman’s role, shareholders have asked board members to work on succession within its ranks and find a chairman who works well with the management.

Thiam’s future atop the Swiss bank could ultimately hinge on whether financial regulator Finma decides he’s unfit to retain the position after the spying scandals. Finma has appointed an auditor to review corporate governance and internal communications among executives, a process than can take several months.

Until then, Herro sees no reason to replace Thiam.

“This is no reason to change a successful CEO as he has not been implicated in any wrongdoing,” he said.

While details and the timeline of any leadership changes are still fluid, Rohner plans to step down in April 2021 at the end of his 12-year term, according to people familiar with the matter.

Khan, who was once mentioned as a potential successor to Thiam, has since settled into a top post at UBS Group AG. But that hasn’t stopped the public spat. The latest twist came in a report that Thiam asked Khan to collect “dirty material” on an executive who criticized him. Thiam took to Instagram to reject the “entirely false and defamatory” reports.

©2020 Bloomberg L.P.

Also read: Credit Suisse Shed U.S. Private Bank With Eye on Reviving It

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