The Business Times

Credit Suisse weighs replacing risk chief in looming executive shake-up

Published Tue, Apr 6, 2021 · 05:50 AM

Zurich

CREDIT Suisse Group leaders are discussing replacing chief risk officer Lara Warner while sparing chief executive officer Thomas Gottstein as they tally losses that could reach into the billions from the collapse of Archegos Capital Management, according to people briefed on the matter.

The bank is set to give investors an update on the Archegos fallout, including the fate of top executives such as investment bank chief Brian Chin, two of the sources said.

They also said the Swiss firm is planning a review of its prime brokerage business, which is housed in the investment bank.

"I think it is unfair at this stage to put this on Mr Gottstein," David Herro from Harris Associates, one of the bank's top shareholders, said in a Bloomberg TV interview last week. "He attempted and has been attempting to reorganise Credit Suisse, but Rome wasn't built in a day. Unless we see evidence to the contrary, I think he is the right person to continue to lead the organisation."

A Credit Suisse spokesperson declined to comment. The No 2 Swiss bank stands as one of the biggest potential losers in the meltdown at Archegos, which could cost banks a collective US$10 billion, JPMorgan Chase & Co analysts have estimated. That came just weeks after the collapse of Greensill Capital, a lender that ran funds Credit Suisse offered to its asset-management clients.

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The one-two punch has made Credit Suisse the worst-performing major bank stock in the world so far this year, as a strong start for its investment bank business was overshadowed by the bank's exposure to Greensill and Archegos, a New York-based family office.

S&P Global Ratings downgraded its outlook for the bank to negative from stable pointing to risk management concerns.

A hit to profit exceeding US$5 billion would start to pressure on Credit Suisse's capital position, according to JPMorgan.

Here are some of the Credit Suisse leaders who will be at the centre of the action in coming days and weeks:

Thomas Gottstein, chief executive officer

The surprise choice to take over in February 2020, following a spying scandal that drove out Tidjane Thiam, Mr Gottstein previously led the bank's business in Switzerland.

When he got the job, he declared that it was "time to look forward", but Credit Suisse's troubles have only metastasised since then. First came a US$450 million write-down on the bank's stake in hedge fund York Capital and costs related to a longstanding legal case into residential mortgage-backed securities. Then, Greensill's supply-chain finance business blew up.

Lara Warner, chief risk and compliance officer

With dual Australian-US nationality and a career that has ranged from equity analyst to investment bank chief financial officer, Ms Warner has taken a less traditional route than many of her peers to the highest echelons of risk management and Credit Suisse's executive board.

She's facing some of the same tough questions as Mr Gottstein about risk-management practices and culture following her personal involvement in signing off on a loan to Lex Greensill in October.

Brian Chin, CEO of the investment bank

Along with Ms Warner, Mr Chin was a big winner in Mr Gottstein's shake-up last summer, when the trading head also won control of the investment bank after a merger of the two units.

His promotion - at least in part - was due to a turnaround in fortunes in global markets during the latter part of Mr Thiam's era. Now, his business is under intense pressure because of the Archegos losses.

Urs Rohner, chairman

The Credit Suisse chairman, who has presided over one of the most tumultuous periods in Credit Suisse's recent history during his 10-year tenure, steps down on April 30, when Lloyds Banking Group CEO Antonio Horta-Osorio takes over.

Antonio Horta-Osorio, incoming chairman

The outgoing CEO of the UK's Lloyd's Banking Group, he led the bank back to private hands following a 2008 nationalisation. The Portuguese national transformed Lloyds in his decade-long tenure, turning it into one of the most efficient lenders in Europe amid thousands of job cuts. BLOOMBERG

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