By Anshuman Daga
SINGAPORE (Reuters) – Credit Suisse Chairman Antonio Horta-Osorio has quit following an internal probe into his personal conduct, including breaches of COVID-19 rules, raising questions over the embattled lender’s new strategy as it tries to recover from a string of scandals.
His exit comes less than a year after he was hired to help the bank deal with the implosion https://www.reuters.com/business/finance/spies-lies-losses-credit-suisses-scandals-2021-11-04 of collapsed investment firm Archegos and the insolvency of British supply chain finance company Greenshill Capital, even as it was still reeling from the 2020 exit of CEO Tidjane Thiam over a spying scandal https://www.reuters.com/article/us-credit-suisse-spying-ceo-idUSKBN2010L3.
Combined these triggered multi-billion dollar losses and sackings at Switzerland’s No.2 bank, and Horta-Osorio unveiled a new strategy in November to rein in its investment bankers and curb a freewheeling culture.
However, the Portuguese banker’s personal conduct has recently come under scrutiny, after he breached COVID-19 quarantine rules https://www.reuters.com/business/exclusive-credit-suisse-finds-second-breach-covid-19-rules-by-chairman-sources-2021-12-29 twice in 2021.
“I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally,” Horta-Osorio said in a statement issued by Credit Suisse on Monday.
“I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time,” added Horta-Osorio, the former CEO of Lloyds.
Credit Suisse said Horta-Osorio resigned following an investigation commissioned by the board https://bit.ly/3fC7Flb, and that board member Axel Lehmann had become its chairman with immediate effect.
“It has been in the ‘damaged goods’ section for a while now. While Horta was responsible for the new strategy, his short tenure means that the revamp is likely to only be in the nascent stages,” said Justin Tang, head of Asian research at investment adviser United First Partners in Singapore.
“The irony of it is that Horta was hired to fix the reputational damage to Credit Suisse and revamp its risk taking culture in the bank,” Tang added.
In December, Reuters reported that a preliminary internal bank investigation had found that Horta-Osorio attended the Wimbledon tennis finals in London in July without following Britain’s quarantine rules.
Horta-Osorio also broke COVID-19 rules on a visit to Switzerland in November by leaving the country during a 10-day quarantine period, the bank said in December.
Public scrutiny of the actions of politicians and athletes has increased amid COVID-19 curbs as governments push to get their population vaccinated.
Tennis superstar Novak Djokovic https://www.reuters.com/lifestyle/sports/detained-djokovic-fight-australian-deportation-court-2022-01-14 flew out of Australia on Sunday after a court upheld the government’s decision to cancel his visa, capping days of drama over the country’s COVID-19 entry rules and his unvaccinated status.
In Britain, Prime Minister Boris Johnson is under pressure to resign after admitting he attended staff drinks during the May 2020 lockdown.
Horta-Osorio’s exit is likely to unnerve investors, who had been hoping his strategic changes would help lift the ailing Swiss bank’s share price.
David Herro, portfolio manager at Harris Associates, Credit Suisse’s third-biggest shareholder, told Reuters before Horta-Osorio’s departure was announced, that he believed the infractions were “minor”.
“One of the reasons to invest in the business today, one of the most important reasons, is that there is a very capable and committed person in that seat that will turn this ship around,” Harris told Reuters earlier this month.
“So, that’s a very important reason to invest in the company. And if that person leaves, that very important reason leaves”.
‘WHAT A WASTE’
Credit Suisse said on Monday that Lehmann, the board and the executive board would continue to implement the bank’s strategy.
“We have set the right course with the new strategy and will continue to embed a stronger risk culture,” Lehmann, who was elected to the board in October, said in the bank’s statement.
Lehmann spent over 10 years at rival UBS, where his roles included helming its Swiss personal and corporate banking unit after nearly two decades at Zurich Insurance Group.
Reeling from a disastrous year, Credit Suisse posted a 21% fall in its third-quarter profit last year and warned of a loss for the final three months of 2021.
UBS, Switzerland’s largest bank, however posted its highest quarterly profit in six years in the third quarter.
Credit Suisse shares have shed 23% over the past one year, while UBS shares have soared 33% to their highest in four years.
Horta-Osorio’s sudden exit demoralised staff at Credit Suisse, with some questioning what was next for the bank.
“What a waste and again we make the headlines for the wrong reason,” a senior Credit Suisse private banker said on condition of anonymity as he was not allowed to speak to media.
“In between we froze for one year waiting for the new strategy from the new man!” he said.
(Reporting by Anshuman Daga in Singapore; Additional reporting by Sumeet Chatterjee in Hong Kong, Simon Jessop and Rachel Armstrong in London; Editing by Himani Sarkar)