Credit Suisse Taps Lloyds Boss as Next Chairman -- Update
By Margot Patrick
Credit Suisse Group AG named António Horta-Osório as its next
chairman Tuesday, marking a changing of the guard after a decade
under current chairman Urs Rohner punctuated by regulatory fines
Mr. Horta-Osório had said in July he was leaving his job as
chief executive at Britain's Lloyds Banking Group PLC. It named his
successor on Monday. The Portuguese executive is one of Europe's
most highly regarded bankers after a turnaround at Lloyds, and Mr.
Rohner said he brings an "impressive record of accomplishments."
Shareholders will vote on the proposed appointment at the bank's
annual meeting in April. Mr. Rohner had said he would leave Credit
Suisse when he hits a 12-year board-term limit at that meeting.
Under Mr. Rohner, Credit Suisse's run-in with regulators
included a $2.6 billion settlement and guilty plea with the U.S.
Justice Department in 2014 for conspiring to aid tax evasion by
wealthy Americans, and a $5.3 billion settlement in 2017 with U.S.
authorities over toxic mortgage securities sold before the 2008
Earlier this year, the bank ousted former CEO Tidjane Thiam for
failing to contain the reputational fallout from a scandal that
involved bank staff being followed by private investigators. The
Wall Street Journal on Monday reported that lawyers hired by Credit
Suisse found two incidents of the bank putting employees under
observation by investigators, predating two others in 2019 that the
bank had blamed on an executive who was fired. Switzerland's
financial regulator started enforcement proceedings on how the bank
controls and documents such activities in September. Those
proceedings are ongoing and Credit Suisse says it is
Mr. Thiam was succeeded by Thomas Gottstein, who had run Credit
Suisse's domestic Swiss unit.
Credit Suisse separately said on Tuesday it could take a
provision in the fourth quarter to reflect a potential $680 million
judgment for damages being sought in a New York civil court over a
mortgage-backed security it sold in 2007. It said it already has
taken a $300 million provision in the case. Credit Suisse said it
believes it has strong grounds to appeal such a judgment.
The potential provision adds to an unexpected $450 million
fourth-quarter charge announced by the bank last week to reflect
changes at a U.S. asset manager York Capital Management, in which
it holds a 30% stake.
At Lloyds, Mr. Horta-Osório, 56, carried out a sweeping overhaul
in the wake of the financial crisis. The bank narrowed its focus
largely to the U.K., shedding most of its investment banking and
investment units and simplifying its operations.
Most of his banking experience, which includes earlier stints at
Citigroup Inc., Goldman Sachs Group Inc. and Banco Santander SA,
has been in retail and commercial banking rather than Credit
Suisse's core business serving the global rich.
In the U.K., Mr. Horta-Osório became regarded as a more
acceptable face of banking after many bankers were vilified for
helping cause the financial crisis. Shortly after starting as
Lloyds CEO in 2011, he played a pivotal role in getting the
country's banks to voluntarily start compensating millions of
customers who had been mis-sold insurance, and said it was the
right thing to do. The industry initially thought the bill would be
around GBP5 billion, equivalent to $6.66 billion, but it spiraled
as more claims came in, and Lloyds alone has paid out GBP22 billion
to affected customers.
Mr. Horta-Osório said Tuesday that it is "a time of great
opportunity" for Credit Suisse and its employees, clients and
While Mr. Rohner has been chairman, Credit Suisse also underwent
an overhaul to adapt to changes in banking after the financial
crisis. Its strategy under former CEO Mr. Thiam to focus on wealth
management has paid off so far in the pandemic. Loan loss
provisions have been relatively contained compared with other
European banks, reflecting its lending in its conservative Swiss
home market and to the rich.
On Tuesday, Moody's Investors Service lifted the bank's credit
rating one notch to Baa1, citing its "improved and more stable
profitability" from that restructuring.
Mr. Rohner has been on the board since 2009 and chairman since
2011. He was the bank's general counsel and chief operating officer
before that, having joined Credit Suisse in 2004 from a German
His time as Credit Suisse has been marked by survival. Swiss
investment adviser Ethos Foundation repeatedly called for
shareholders to vote against his reelection at annual meetings, and
most recently this year it said he should resign to take
responsibility for the spying scandal.
The bank's biggest shareholder with a roughly 8% stake, David
Herro of Harris Associates, also called for Mr. Rohner's
resignation this year, but Mr. Thiam was forced out instead.
Write to Margot Patrick at firstname.lastname@example.org
(END) Dow Jones Newswires
December 01, 2020 07:26 ET (12:26 GMT)
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