Credit Suisse’s Fix-It Banker Lost His Standing as a Role Model
(Bloomberg Businessweek) -- From the day he took over as chairman at Credit Suisse Group AG in May of last year, António Horta-Osório made no secret that he planned to take a tough, hands-on approach to the role. In his decades running financial institutions, he’d never experienced a bank in crisis quite like Credit Suisse, he said at the annual shareholders meeting.
The 166-year-old bank had staggered from one humiliation to another. First there was a corporate spying scandal involving senior executives, then the collapse of Chinese client Luckin Coffee. Even more disastrous was Credit Suisse’s involvement with doomed finance company Greensill Capital and its billions of dollars of losses from the implosion of one of its trading customers, Archegos Capital Management.
Now Horta-Osório has added to this list of embarrassments. He resigned on Jan. 16 after being accused of flouting coronavirus quarantine rules with several trips abroad, including flying to London last year to watch the Wimbledon tennis tournament.
Even in the hire-and-fire world of banking, the abrupt departure of AHO, as the Portuguese banker is known, is an anomaly. Rarely has an executive who came in with such fanfare flamed out so spectacularly. It took just nine months for Horta-Osório to go from star hire to outcast, and some who witnessed his decline and fall speculate that the quarantine probe may have been an opportunity to sever ties with a leader who’d alienated too many inside Credit Suisse.
In his parting words, Horta-Osório, who was set to make 4.5 million francs ($4.9 million) a year when he came into the job, acknowledged that his actions had compromised his ability to do any kind of cleanup. “If this had been any other banker, it wouldn’t be so devastating,” says Arturo Bris, a finance professor at IMD Business School in Lausanne, Switzerland. “He was making the case for Credit Suisse bankers to be role models, and executives have to walk the talk.”
Horta-Osório had an imposing style that sidelined the chief executive officer, Thomas Gottstein, shadowing him on tours through the bank and making surprise appearances at meetings, say people who asked not to be identified discussing confidential matters. At meetings, he would frequently talk over Gottstein, creating tension between himself and the bank’s more reserved Swiss CEO.
By the middle of last year, an exodus had set in at Credit Suisse’s investment bank, with many of the departures prompted by the damage to the company’s reputation from the constant stream of scandals. But Horta-Osório wasn’t seen as doing enough to stem the flow. He told bankers that Credit Suisse had a strong wealth management business “with ancillary services," even though the investment bank delivers more revenue than any other division and ranks in the top 10 globally.
When Credit Suisse announced Horta-Osório’s appointment at the end of 2020, the bank’s leadership was already in bad shape. Gottstein’s predecessor, Tidjane Thiam, left earlier that year after the company was caught spying on a star banker who’d defected to crosstown rival UBS Group AG. And things were about to get even worse.
Weeks before Horta-Osório even took over, the bank suffered two more crushing blows. Credit Suisse lost $5.5 billion over its dealings with Archegos, the investment vehicle of trader Bill Hwang, which defaulted on loans from banks it used to build a $100 billion trading portfolio. Shortly before, the freezing of funds tied to Greensill Capital, an invoice financing specialist, led to a frantic effort to recover $10 billion of trapped clients’ money and contributed to the departure of numerous senior managers.
While Horta-Osório was something of a surprise pick—the first non-Swiss person to fill the chairman role at the Zurich-based bank—he promised a fresh perspective as a retail banking veteran with the international experience to complement the Credit Suisse lifer Gottstein. He was credited with reviving Lloyds Banking Group Plc after the 2008 financial crisis, including by cutting head count by about 40%, or more than 41,000 workers. He’d also displayed a human side not often seen in the shark tank of global banking. In 2011, Horta-Osório took a nine-week medical leave after suffering from overwork and sleep deprivation.
The Lloyds triumph cemented his reputation as an astute turnaround specialist and eventually earned him a British knighthood. He took visible pride in his new title by signing off internal memos as Sir António.
With Horta-Osório’s tenure cut short, Credit Suisse is left with a leadership duo made up of two Swiss nationals thrust into their roles in the wake of the messy departures of their predecessors. The new chair, Axel Lehmann, is a relative newcomer who joined the board of directors in October after a career at Zurich Insurance Group AG and UBS.
Employees who attended a town-hall meeting following Horta-Osório’s surprise weekend ouster described a sense of relief permeating the gathering. Gottstein was chipper as he addressed employees about the post-AHO future. Lehmann reassured them that he’d lead the bank “without distractions,” a welcome departure for some from Horta-Osório’s leave-no-stone-unturned approach.
Investors, some of whom had counted on AHO being the person to repair the company’s culture, were less thrilled. David Herro of Harris Associates, the biggest Credit Suisse shareholder, said he was “very disappointed.” Citigroup Inc. analysts wrote that Horta-Osório’s departure “leaves Credit Suisse with a lack of strong characters at the top.” —With Nicholas Comfort
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