Credit Suisse’s top shareholders have thrown their support behind chief executive Tidjane Thiam and called on chairman Urs Rohner to quit, in a high-stakes power struggle at the Swiss bank following a spy scandal last year.
Relations between Mr Rohner and Mr Thiam have been increasingly strained since revelations that Credit Suisse hired a corporate espionage company to follow Iqbal Khan, a former executive who defected to arch-rival UBS.
The battle has intensified ahead of a crunch board meeting on Thursday after reports emerged that Mr Rohner was drawing up a shortlist of candidates to potentially replace Mr Thiam this year. Credit Suisse declined to comment.
On Wednesday evening, David Herro, vice-chairman of Credit Suisse’s largest shareholder Harris Associates, wrote to directors saying it would be a “terrible mistake” to oust Mr Thiam and pointing out deficiencies in Mr Rohner’s own performance during his 16 years at the bank.
Earlier in the day, the investor told the Financial Times: “We are at the stage now where it is one or the other.”
In an interview, Mr Herro pointed to a list of prior legal problems at Credit Suisse, including a $5.3bn settlement with the US Department of Justice over the pre-crisis sale of toxic mortgage bonds and the bank’s involvement in the “tuna bond” scandal in Mozambique.
“All of these things the chairman presided over; he was legal counsel when all the pain occurred,” he told the FT. “Don’t listen to what Urs is telling you. Who do you want to keep — the guy who caused the problems, or the guy who is fixing them?”
US-based hedge fund Eminence Capital has written to the bank’s non-executive directors to warn them against pursuing “a personal agenda with respect to the CEO rather than act[ing] in a responsible fiduciary way”. A copy of the letter, which also threatened legal action against Credit Suisse’s board, was seen by the Financial Times.
On Wednesday, Silchester International Investors, which said it owned 3.3 per cent of the Swiss bank, also called on Mr Rohner to resign if he could no longer support Mr Thiam.
In a statement, Silchester said it was “not aware of any reason why [Mr Thiam] should not continue to have the full support” of Mr Rohner and the Credit Suisse board.
It added that the chairman should “retire as planned in 2021” or sooner if he “feels unable to continue to support the CEO”.
Tim Linehan, senior partner at Silchester, decided to make the letter public after Mr Rohner rejected his request to circulate it to the rest of the board before the Swiss stock market opened on Wednesday, according to a person familiar with the discussions.
Meanwhile, Eminence founder and chief executive Ricky Sandler wrote in a separate letter this week that it would “hold the chairman and the rest of the board accountable for their behaviour that is value destructive to shareholders”. Eminence said it “will not hesitate to pursue legal and or governance actions to protect shareholders’ interests”.
US-based Harris owns an 8.4 per cent stake in Credit Suisse. In a Bloomberg Television interview on Monday, Mr Herro warned the bank’s board against “tinkering with management” and suggested that Mr Thiam — who is the first black chief executive of Credit Suisse — may be encountering racism.
He said: “To be very frank, it seems [like] envy from competitors or perhaps something else given that Mr Thiam looks a little bit different than the typical Swiss banker. Either one of these two rationales behind these attacks against him, to me are extremely distasteful.”
Mr Herro told the FT on Wednesday why he felt the need to speak out: “The only reason I didn’t push for Urs to leave earlier is because he told me last week he constantly supported the CEO and was leaving himself in 2021,” he said. “Both those things I now have reason to believe were not true . . . I was fooled by him.”
Mr Thiam has radically reshaped the 163-year-old Swiss bank since joining in July 2015, expanding its wealth management division while downsizing its volatile and capital-intensive trading arm.
After a rocky start with billions of cumulative losses in his first few years, his overhaul is starting to bear fruit.
Credit Suisse’s progress under Mr Thiam has been overshadowed by Mr Khan’s departure and the spying scandal, which led to a constant string of lurid stories in the Swiss press.
Mr Thiam was initially cleared of any involvement by an external law firm, and two senior Credit Suisse executives were fired.
However, following the news that the surveillance of Mr Khan was not an isolated incident, Switzerland’s market regulator, Finma, announced launched its own formal probe into the bank.
One person familiar with Mr Thiam’s plans said whilst he was “fed up”, he would never quit the bank and that Mr Rohner would have to fire him. He attributed the campaign against Mr Thiam to “clannish” and conservative Swiss members of the board.
Copyright The Financial Times Limited 2020