Spy scandals and grudges: Behind Thiam’s Credit Suisse execution
It took Credit Suisse’s chairman 19 meetings to woo Tidjane Thiam and one board meeting to say goodbye.
In a matter of hours Thursday, the Swiss chairman of a Swiss bank put the Swiss back in charge, ousting the French-educated native of the Ivory Coast.
The boardroom showdown in Zurich capped an extraordinary run of public scandal and private feuding at the highest levels of the Swiss bank. It leaves the new leader, Thomas Gottstein, with the task of brokering peace among executives and restive stockholders — some of whom are still calling for Chairman Urs Rohner to follow Thiam out the door.
In the end, the bizarre disclosures that engulfed Credit Suisse under Thiam — executives spied upon, grudges among top managers — proved too much for the bank’s board and an establishment that prizes discretion. A stock price that had declined by about 50% during his tenure didn’t help either.
“We saw a deterioration in terms of trust, reputation and credibility among all our stakeholders,” Rohner said in an interview Friday. He said the bank’s reputation was particularly damaged in Switzerland, which accounts for about 40% of the bank’s pretax income.
The swift end to Thiam’s tenure couldn’t be more at odds with his auspicious start at the bank. Rohner spent months courting Thiam before the star insurance executive joined in 2015. The six-foot-four Thiam came with glowing credentials: Under his watch, shares of Prudential had tripled and Swiss newspaper Blick lauded him as the “Obama of Credit Suisse” shortly before he joined the firm. With Rohner’s backing, Thiam overhauled a bank that had been battered by a volatile trading business in the years following the financial crisis.
In the early days, Thiam and Rohner projected a united front. The two men were seen together at the Sechselaeuten, a traditional Swiss parade, in the spring of 2016 dressed in 17th-century frocks and tricorn hats. Rohner, a Swiss lawyer, relied on his new hire to push through a deep restructuring that led to the loss of thousands of jobs and shrunk the bank’s trading business.
But there were signs of a rift early on after a huge trading loss in 2015, prompting Thiam to publicly complain that he was blindsided by his traders. Rohner took the position that Thiam should have seen it coming.
Years later, a conflict between them brewed again over Thiam’s dispute with ex-international wealth management head Iqbal Khan. Under Thiam, Khan enjoyed a steady rise. The two men were so close that they became neighbors in the upscale Zurich suburb of Herrliberg.
But their relationship soured as Khan’s success grew and he assumed the role of “crown prince” in a possible CEO succession. Tensions between the two men erupted in an altercation at a party at Thiam’s house in January 2019, prompting Khan to complain to the bank’s board. The next month, Khan was passed over for a promotion that elevated two of his colleagues to the executive committee. And by July, the wealth management star was quitting to join crosstown rival UBS. What happened next sparked an international scandal.
One of Thiam’s deputies, Pierre-Olivier Bouee, hired detectives to follow Khan — a development that became public after Khan confronted his pursuers in downtown Zurich. As the fallout from the scandal spread, a contractor who hired detectives for Credit Suisse took his own life, prompting a police investigation. At a press conference in October, Rohner apologized to Khan and his family, while maintaining that the board fully backed Thiam.
Thiam was absolved of responsibility in an internal probe, with the board blaming his lieutenant Bouee for ordering the surveillance. Bouee had been a close confidante of Thiam’s at three companies for more than a decade, yet his former mentor distanced himself. Referring to his longtime colleague, Thiam said publicly that he wasn’t “sure you can describe him as a friend.” Rohner was displeased by that statement, according to a person familiar with his thinking.
The bank has struggled to contain the crisis ever since. In December, a second spying incident came to light, after it was reported that former HR head Peter Goerke had been followed. This episode was a turning point for Rohner, as it indicated a pattern and left the bank unable to explain the spying. It also unsettled Swiss regulators, who have launched their own inquiry into the culture at the top of the firm.
After Bloomberg News reported on Jan. 31 that Rohner was preparing a list of successors to succeed Thiam, top shareholders including Harris Associates, Silchester International Investors and Eminence Capital came to Thiam’s defense. They said Rohner should be the one to go if he couldn’t back Thiam.
Publicly, the chairman was on the defensive. Privately, he was lining up support from other shareholders, including Qatar’s sovereign wealth fund and the world’s biggest money manager, BlackRock. He was also counting on the board’s support.
“The issues accelerated, probably more than we wanted in the last couple of days,” said Rohner, who received unanimous backing from his directors.
After a dinner on Wednesday night, the board convened Thursday for about eight hours of meetings in the make-or-break showdown. The directors had already debated — at length and in detail — the spying and its consequences on several occasions, Rohner said. So by the time they met on a crisp and sunny morning in Zurich, most of the issues had been prepared in advance.
An expert in legal maneuvers, Rohner expedited the management change like any other board meeting. By early evening, his staffers were already working on the announcement for Thiam’s resignation.
One of Rohner’s arguments that resonated with the board was that Thiam had done too much damage in Credit Suisse’s home market — “among all of our stakeholders, clients, employees, regulators.” That emphasis on Zurich may also help explain the disconnect with a number of non-Swiss investors.
After Thiam’s ouster, David Herro, deputy chairman of Harris Associates, reiterated his criticism of Rohner, calling on him to quit. “Our worry is that you have this new CEO who is capable and talented but above him, a chairman who is less than capable and talented and a board who seems to just mimic, just follows blindly whatever he says,” Herro told Bloomberg TV on Friday.