After the very public scapegoating of former Credit Suisse COO Pierre-Olivier Bouee, most observers probably believed the Credit Suisse spying scandal was over, and that CEO Tidjane Thiam would survive to lead the Swiss megabank through hopefully happier times.
But last month, we reported that Bouee had decided to fight back. And now, not three weeks later, on an already-busy Friday, Thiam's resignation has reportedly been accepted unanimously following a brief but brutal boardroom power struggle between Thiam and CS Chairman Urs Rohner.
Offering an unmistakable sign that this is the end of an era at Credit Suisse - an era of choppy transformation led mostly by executives who hailed from the outside world, instead of the bank's native Switzerland - the board announced that Thomas Gottstein, the head of CS's domestic business in Switzerland and a Swiss native, would take the reins as the new CEO, per FT.
The conflict between Thiam and Rohner began shortly after the Zurich-based bank hired a corporate espionage company to tail its former wealth management head Iqbal Khan while he was on "gardening leave" from CS ahead of taking a new job at rival UBS. That scandal was very public, very messy (before the scandal subsided, an employee with the corporate-espionage company had killed himself) and most believed it would be an irrevocable stain on Thiam's reputation. After it emerged that Khan wasn't the only executive who was surveilled, the relationship between the chairman and CEO appeared to be irreparably broken.
But somehow, Thiam survived (after offering Bouee as a human sacrifice). And although the financial press largely applauded his resourcefulness and expressed an eagerness for Thiam's second act, the CEO was never really able to get clear of the scandal.
As recently as earlier this week, it appeared that Thiam, who has claimed to have no knowledge of the spying incident, had won the support of the bank's American shareholders, a critical constituency, and that he would likely resist Rohner's bid to push him out.
But some time late this week, Rohner clearly landed the kill shot, and on Friday morning, Thiam revealed that he had "agreed with the Board that I will step down from my role as chief executive. I had no knowledge of the observation of two former colleagues. It undoubtedly disturbed Credit Suisse and caused anxiety and hurt. I regret that this happened and it should never have taken place."
Thiam will formally step down after presenting 2019 earnings next week. CS shares sunk 4% on news of his departure (they had rallied 7% on the day back in 2015 that Thiam was announced as the bank's new CEO, while shares of Prudential sank). The soon-to-be-former CEO had an interesting career: He distinguished himself as the head of Prudential, a UK-based insurer, after arriving in the UK after fleeing the Ivory Coast, his home country, after a military coup, the Guardian reports.
In a statement on Friday, Mr Thiam said: "I had no knowledge of the observation of two former colleagues. It undoubtedly disturbed Credit Suisse and caused anxiety and hurt. I regret that this happened and it should never have taken place. I have agreed with the board that I will step down from my role as CEO. I am proud of what the team has achieved during my tenure. We have turned Credit Suisse around."
Thiam took over from American Brady Dougan with a remit to overhaul the lender. During his tenure, he shrank CS's investment bank and built up its wealth-management franchise.
As the FT explained, the battle of Thiam's future pitted American shareholders vs. Swiss insiders against one another. It's possible that this battle will continue during Gottstein's tenure.
Harris Associates, the bank’s largest investor, has been a vocal advocate of Mr Thiam’s, and has spoken at length about the danger of ousting him. The US asset manager blamed efforts to undermine Mr Thiam on a Swiss clique within the bank, resistant to necessary reforms and hostile to outsiders.
New York-based hedge fund Eminence Capital, which owns about 2 per cent of the stock, earlier this week threatened legal action or a proxy fight against Credit Suisse’s board if they fired Mr Thiam. “It’s not my preferred action, and I know it will be hard, but we are prepared to dig in and do this,” Eminence founder Ricky Sandler told the FT on Thursday, adding he would consider calling a special meeting of shareholders to oust Mr Rohner. "We have done these types of things before to protect our investments."
Severin Schwan, the lead independent director on the bank’s board issued a statement in support of Mr Rohner’s chairmanship. “Urs Rohner has led the board commendably during this turbulent time. After careful deliberations, the board has been unanimous in its actions, as well as reaffirming its full support for the chairman to complete his term until April 2021,” he said.
It's the end of an era for the Swiss lender. Now that the so-called "Swiss clique" is now back in control, will we CS step up to challenge HSBC and Barclays by rebuilding its investment banking business? We're curious to see where they take things.